Using the SMA and EMA together

[murray t turtle]

Maybe I wasn't clear in my previous post. The link I provided was to the first of a series on what moving averages are and how they can be used in real life. Those applications are worked out in subsequent episodes of that series.

%%
OK;
+ back to the 200 day moving average.

 

[d08]

To each his or her own! Just an idea of how to look at price action differently. Thanks for the reply.

I still don't understand how this is different or new.
This stuff has been repeated over and over again ad nauseam in almost every trading/TA book from the 80s and 90s. I remember always coming across it and in backtests it was completely and totally worthless. I could always find a chart where it looked good in hindsight, that's it, nothing else - it does not work in forward testing, it's of no value.

 

[oraclewizard77]

I see the benefit of using the same number for the SMA and the EMA to at certain times see how trend is changing and to stay on the right side of the current trend for a trade setup.

 

[d08]

I see the benefit of using the same number for the SMA and the EMA to at certain times see how trend is changing and to stay on the right side of the current trend for a trade setup.

Why not just use a longer period SMA/EMA and a slightly short period SMA/EMA. It does effectively the same thing.

 

[oraclewizard77]

I also have longer period EMA's. I never used SMA before reading this thread. The benefit of the SMA is allowing in real time to see a trend change. Obviously, you can't do this on stocks but on futures you could see a trade setup or a confirmation.

Why not just use a longer period SMA/EMA and a slightly short period SMA/EMA. It does effectively the same thing.

 

[panzerman]

Try using two different EMAs with different alphas of the form:

y[0] = alpha*(x[0]+0.5*(x[0]-y[-1]))+(1-alpha)*y[-1]

Not that I think it will ultimately result a profitable trading system for you, but if you insist on using MAs, at least use ones that have minimized lag.

 

[tomorton]

Mixing types of MA in a strategy has no intrinsic value. The choice of an MA period or of multiple MA periods must be derived from the strategy, not the other way round. You can mix up EMA's and SMA's, it makes no difference if you do or if you don't.

But any indicator used, including MA's of any description, should pay its own way - that is, it must tell you something which you cannot otherwise derive from the chart, and which is essential in your decision to enter or exit.

 

[murray t turtle]

Mixing types of MA in a strategy has no intrinsic value. The choice of an MA period or of multiple MA periods must be derived from the strategy, not the other way round. You can mix up EMA's and SMA's, it makes no difference if you do or if you don't.

But any indicator used, including MA's of any description, should pay its own way - that is, it must tell you something which you cannot otherwise derive from the chart, and which is essential in your decision to enter or exit.

%%
True;
unless you discern on the charts a MA is getting to crowded. Like an interstate works well; except in extreme rush hour, better off going a different route........................................................................