What is better: using a simple moving average or price action?

My first exposure to market timing and TA was through a study of moving average.

But with experiece comes understanding (well, at leased it's supposed to).

The ONLY objective in trading is to have your risk position "in tune" with the market's buying/selling.... as defined by "price".

Moving Averages are "1st derivatives of price". Is knowing that better than knowing "price"?

MACD is a 2nd derivative of price. Is that better still?

What about a "moving average of MACD"? That would be a 3rd derivative of price. Is that nirvana... the best that can be?

Maybe not... how about a "moving average of the moving average of MACD"?

Yadayadayada.

See where this is going?

Not saying "moving averages are worthless"... they do indeed have some worth. But considering their limitations should one try to build a trading system around them?
 
Last edited:
I bullied you in public therefore i am apologizing to you in public, im sorry i tried to make a joke out of you. I hope you forgive me. Best of luck to you
 
traderGOD said:
see the live chart of uerusd below? do you think that moving averages are showing where the price has gone? or where it is going?
here both moving averages and price action are SHOUTING the same thing

View attachment 185698
More...

No, moving averages and price action are not shouting the same thing in that example. Moving averages are all saying downtrend, but price action shows that we may be hitting a support level. Maybe price continues downward, but in that particular example, I would not follow the moving averages and go short.

If it was possible to build a consistently profitable trading system based only off of moving averages, that would be nice. Goldman and other banks could fire all their quant Ph. D's and just setup some basic moving average crossover signals in ThinkorSwim.
 
ET180 said:
No, moving averages and price action are not shouting the same thing in that example. Moving averages are all saying downtrend, but price action shows that we may be hitting a support level. Maybe price continues downward, but in that particular example, I would not follow the moving averages and go short.

If it was possible to build a consistently profitable trading system based only off of moving averages, that would be nice. Goldman and other banks could fire all their quant Ph. D's and just setup some basic moving average crossover signals in ThinkorSwim.
More...
i am not sure if i said only moving averages should be used but it is possible that impression may have been given.
 
1NCOGN1TO said:
I bullied you in public therefore i am apologizing to you in public, im sorry i tried to make a joke out of you. I hope you forgive me. Best of luck to you
More...
of course i do [forgive]
I am the worst trader in the world.
Thanks for your good wishes and please continue to drop by, to post and give your valuable insights.
 
Last edited:
traderGOD said:
i am not sure if i said only moving averages should be used but it is possible that impression may have been given.
More...

What computer-generated indicator aside from chart patterns are not a type of filter? Unless the signal is derived from another instrument, what you're looking at is filtered price. If one knows how to read a chart, I don't think moving averages add much...aside from highly followed averages (like the 50 day MA on the SPX today -- price traded around it most of the day). But I don't think one could build a trading system off that alone.
 
PERHAPS I SHOULD REPHRASE MY COMMENTS IN THIS POST.

Traders have dismissed the use of moving averages but it does help in interpretation of certain market conditions just like price action does.
I use both and perhaps if you are interested in how i use both, you could visit my journal where i explain in depth with charts the reasons for each trade and leave your impressions, insights and advice. i am sure both of us will benefit and i know that i will benefit
 
ET180 said:
What computer-generated indicator aside from chart patterns are not a type of filter? Unless the signal is derived from another instrument, what you're looking at is filtered price. If one knows how to read a chart, I don't think moving averages add much...aside from highly followed averages (like the 50 day MA on the SPX today -- price traded around it most of the day). But I don't think one could build a trading system off that alone.
More...
yes it is a crutch; it does not tell you anything new; you could just eyeball the chart.
But i need a crutch so i use the averages; it helps give me confidence and confidence commitment is critical in trading
If you need a walking stick or a crutch you had better use it and not feel ashamed
 
Last edited:
I am really loving this forum. even the teasing and being made fun of.I am mature enough for all of that.
Love the exchange of ideas
 
You must log in or register to reply here.
Back
Top