which moving avgs do most traders use?
- Thread starter cashclay
- Start date
why do you care what other people use?
maybe they all morons?! (99.99 % failing in trading anyway)
or may be geniuses
? (in which case they would tell you nothing)why do you want to use moving average?
do you know how you want to use it, did you try it, did you work with it, did you research it ?
the answer is probably no , because if the answer would be yes you would figure out which MA to use (or not to use at all), with which period, and etc etc,, and you would not need to ask stupid public stupid questions
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If you're a swing player, MAs have some worth, but I wouldn't try to make a system out of their use. The ones most players watch are the 50 & 200. If "everybody is watching them", so should you. Sometimes MAs mean very little/ nothing....as in the chart posted by expiated.
Moving averages are just noise to the knowledgeable trader.
I'll echo a lot of the comments already made above.
Many years ago, when I was first getting into trading, I did a lot of testing using moving averages, including moving average crossover systems. I discovered a few interesting things along the way that propelled me to learn more about the markets, but I didn't find any statistically significant patterns when using moving average crossover signals on equities. I distinctly remember being tremendously (over-) excited one day when I thought I had found a great edge, but fortunately I had enough sense to go learn enough statistics to properly test that hypothesis before putting money on it. I saved myself from losing money and gained knowledge in a then-new-to-me field to boot.
Fast forward fifteen years and I now have three models with high statistically significant and tradeable edges. (Personally, I define having an "edge" as having a positive expected value of profits and losses; ie E(PL)>0, PL=all profits and losses due to this strategy. I go beyond basic statistics to verify that E(X) is truly statistically significantly positive, including various checks of robustness, using both parametric and non-parametric statistics, etc.) One of these models involves the 200 day SMA, but the moving average is used as a filter, not as a trading signal. This model could be viewed as the combination of two (related) models: when the price is above the 200 day SMA, I use model M1 and when it is below the 200 day SMA I use model M2. The reason for choosing the moving average is, in fact, rooted in the rationale for the formulation of M1 and M2 in the first place. It's not arbitrary.
I'll end here. I'm being called for dinner..... lol
Many years ago, when I was first getting into trading, I did a lot of testing using moving averages, including moving average crossover systems. I discovered a few interesting things along the way that propelled me to learn more about the markets, but I didn't find any statistically significant patterns when using moving average crossover signals on equities. I distinctly remember being tremendously (over-) excited one day when I thought I had found a great edge, but fortunately I had enough sense to go learn enough statistics to properly test that hypothesis before putting money on it. I saved myself from losing money and gained knowledge in a then-new-to-me field to boot.
Fast forward fifteen years and I now have three models with high statistically significant and tradeable edges. (Personally, I define having an "edge" as having a positive expected value of profits and losses; ie E(PL)>0, PL=all profits and losses due to this strategy. I go beyond basic statistics to verify that E(X) is truly statistically significantly positive, including various checks of robustness, using both parametric and non-parametric statistics, etc.) One of these models involves the 200 day SMA, but the moving average is used as a filter, not as a trading signal. This model could be viewed as the combination of two (related) models: when the price is above the 200 day SMA, I use model M1 and when it is below the 200 day SMA I use model M2. The reason for choosing the moving average is, in fact, rooted in the rationale for the formulation of M1 and M2 in the first place. It's not arbitrary.
I'll end here. I'm being called for dinner..... lol
How has that model been working for you in your live trading?
Anyone trying look at SMA from the market perspective? At a single stock, it may not mean much. Just take any SMA, e.g. SMA 50. When a stock is above it, start counting the number of days it's about it. Let's say, you track for a period of one year. Do a frequency plot in terms of number of days above SMA. Do for a couple of years and see the frequency plot.
I second Overnights question! And definately tell us more about M1 and M2! When you dont have food in your mouth.