Was looking at a presentation and noticed that presenter's 200 simple moving avg didn't match mine on intraday timeframe. The difference was due to pre-market activity. Given that it's widely used and thus becomes a self full filling profecy, I wander how people have theirs set.
you are going down the wrong path, and there will be no pot of gold at the end of the 200MA rainbow. think logic, think poker, think what hands they are holding, what is the story, what is the situation, how they are trying to con the money out of your account, and what is your counter strategy. this is a life and death battle. this is who outsmart who. 200MA is garbage in garbage out.
Don't overthink it ... just a poll to satisfy my curiosity BTW, lots of general terms, and no specifics. It's is what you make it to be, right? Life and death?! ... only if you choose it to be.
'specifics' is why most amateurs fall into the TA trap... because the specifics it provides are so secure... it's 200MA, not 199 or 201. it's with or without premarket data. no ambiguity. real trading is not like this. you assess the situation, you get to the point that you are 77% sure that this is 'buy the rumor sell the news', or this is 62% sure that it's a retest of the panic bottom... etc.... and then you push in the chips accordingly. look at the shakes since Feb... if you use the above principle, you can make a bundle, even without too many specifics.. but, here are some lines of thinking you can use as reference, for what real trading is like: what is the current 'news of the day'? who is pushing this? why are they pushing this? what is the public sentiment - what is the long/short ratio in the hands of the retail? what price action has validated/negated the previous news story? and if the previous story was bogus, how valid is the current story? what is the overall valuation of a certain asset class e.g. equities vs. other assets? what is a reasonable price target forward looking 12 months? what is the current timing in the earning cycle (very important!), how much time do they need to pull it up into the earnings, therefore how much time do they have left to keep shaking the tree? This is how real trading is like... hopefully it is specific enough... there is no guarantee in trading... unlike the 200MA you can be specific to 4 decimal points, real trading provides a background and a story... if you read the story correctly, you make money.
No disagreement, but keep in mind you are most likely making money off those "amateurs", so doesn't hurt to understand their (our?!) view of the world.
The public in general are swayed by news stories, not 200MAs. If they are disciplined enough to always follow the 200MA, the worst they can do is break even, as the 200MA mostly is a useless indicator, but it does not give much harm either. The public is like a herd of sheep, pushed around by the Wall Street meat grinder, nowadays with 24/7 news stories they manufacturer to convince the public to buy or sell.... and a few of the sheep may use TA to justify their actions, but that is the minority. So with a broad stroke of the brush, if you look at this as a game where the smart money cleans up the dumb money, then you'd be naturally focused on the hands held by the dumb money, and how the smart money uses the media outlets to create panics so the sheep jump off the cliff.
Assuming you're a trader...not an analyst and not an investor...how the heck can you say "widely used" ??? Most traders do not use the 200 sma. In contrast, most are intutition traders, trading via something that they had not properly backtested or not using TA and preferring to use DOM (bid/ask info). I will say that "most" traders have heard about the 200 sma, 50 sma or whatever but that doesn't imply "most" are using it. Its just a popular or common tool in charting programs...very easy to plot and marketed. The self fulfilling prophecy theory... “A false definition of the situation evoking a new behavior which makes the originally false conception come true” (Merton, 1968, p. 477). In my opinion, to evoke a new behavior...key market participants that move the markets would need to be using the 200 sma. I highly doubt key market participants or most traders are using the 200 sma to allow for that self fulfilling prophecy to work especially for stocks or any thing else. wrbtrader