"Best" has to be derived from the trader's individual strategy. So there can't be one "best" MA for everyone at any given time, though they may all say they are trend-following this same market. Of course, "best" cannot simply be measured by something universal, like % gain per day for example. But trends tend to continue, that's the most probably next movement of a price in a trend, that's why tends exist as a pattern and why they can be recognised. So I have to think that the most consistent trends are the most likely trends to continue. And that is really what "best" means to me, but that's just me. MAS's are a great tool for recognising and quantifying multiple characteristics of trending prices. At the end of a day, buying a market in an uptrend isn't guesswork.
All of which is fine as long as one remembers that the moving average is rising because price is rising, not the other way around. As for trends tending to continue, they also tend to reverse abruptly, and if one relies too heavily on MAs, those reversals can be masked.
I think you are missing the point and debating for the sake of debating. If you wish to measure whether price is in a trend, a simple method is measure a MA. And tomorton raised a valid point, Quote:"So I have to think that the most consistent trends are the most likely trends to continue. And that is really what "best" means to me, but that's just me. MAS's are a great tool for recognising and quantifying multiple characteristics of trending prices." Therefore as far as I'm aware, we are not discussing here in this thread MA's as forecasting tools and what price might do like trend changing.
Don't have the time for that. There are important points and distinctions to be made, if anyone cares to explore them. An even simpler method is to draw a trendline. Key words being "I think". Tomorton is obviously intelligent and experienced, but anecdotal data aren't enough to judge whether or not "trends" will "continue". Even a discretionary trader seeks to be more rigorous than that. I'm posting this stuff with regard to the initial post. If none of this is what the OP had in mind, there's no point in posting further.
Yes, MA's are an indicator of what has happened, not an indicator of what is to come. That said, what price has done indicates what price will probably do next, and as MA's clarify price action, they also clarify what price will probably do next. Yes, trends can reverse abruptly, but most do not. In order of probability, from my experience, I suggest that long-term trends: 1) continue 2) pull back and then continue 3) consolidate and then continue 4) consolidate and range 5) consolidate and reverse 6) reverse There is a perception that prices which have been consistently uptrending fall very rapidly, and this is dramatic when it happens but also the least likely. But heck, if price falls I close my longs, so what?
Whether or not what price has done indicates what price will probably do next depends on context. What price has done may indicate no particular movement at all. Therefore, the conditions for the MA clarification and indication mentioned above may not necessarily be there. In any case, whatever the MA clarifies or indicates will be late. By the time the MA(s) tell the trader to exit, the price trader is already gone. If longs are closed because price has fallen, what's the point of the MA(s)? If the trader requires additional clarification, perhaps he should devote more time to studying the price behavior of his particular instrument. But this ground has been well-trod and the "argument" has become circular. If I have not yet made my point, that's my failure. But I've done my best and am moving on. Hope your trading goes well today.
That's ridiculous. There's no benefit in knowing if prices are trending if there's no practical use for it. The only use for it would be for market commentary.
Thanks lcranston. I actually have no trades open today and no orders pending, having twice made sufficient profit this month that I can't justify trading.
The most important consideration to me is not only where I will enter but .... where I will place my stop. Which is why I would rather buy a pullback (within a trend of course) rather than a breakout to new highs because swing low exit is closer.