Question About Moving Averages

Another step closer to your Holy Grail!

 

Hi,

Here's my opinion on the use of MAs -- always use 2, try to use something other than close (ie. (High + Low)/2), and use something better than Simple (ie. exponential or volume weighted).

In my experience with intraday MAs - those on the Chat have heard this - you need penetration of the MAs to signal a buy/sell.
In so many cases, the price will bounce off the MAs ,and in a few cases, you will have to stop out trades and the MA and reverse.

Okay, the short answer -- lose the equal sign.


Best of luck,

dB

 

NKNY

I want the moving averages to stay in close proximity to each other, without crossing for the intermediate term trend. If the moving averages cross, I abandon the stock. The price channel is the technical indicator by that name, that you can find on Big charts.com.

I daytrade breakouts but I use this system to trade the rydex funds. Its as close to the holy grail as I have ever been able to find.

regards

 

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Caplan8293;

In closing , in a uptrending bull market ,I generally wouldn't sell if MA =current price .
Generaly wouldnt sell if closing price = MA either.

In a downtrending bear market, which we are NOT in, may not wait until a current price =a closing price.


In this uptrending, bull market would not wait to sell
until closing price = OR closes below 200 day MA also.
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Make hay while the sun shines.

 

Where you should be buying is when price is significantly below the MA, not above. Think about what an MA is. It is a picture of where price has historically lived. It is the "gravity" that a stock price will typically revert to. Going long above that level is not going to generally provide you consistent gains.

 

You couldn't make it any simpler than that.

 

While you speak wisdom here -- buying significantly below a moving average -- it is not part of a moving average crossover system.

The MA system is a lagging trend following system. It will sacrifice profits to ensure that the entry is in the direction of a confirmed trend. Your quote above is probably the best argument against using MAs as a system but doesn't answer the thread originator's problem. If one has decided on a MA system due to its simplistic nature, going beyond this scope would be overwhelming and possibly more determental.

Peace.

 

;-)

 

better try that again.

 

Moving averages are very investment specific. Certain lenghts work better for certain vehicles. First find the best average for your vehicle and in your back testing you can see what works best.