But to be fair I was attempting at swing trading this method in a huge choppy market so I think this contributed to the failure of using this method. Saying that, attempting swing trading using MA's would not improve things either. I'll continue to keep an eye on it going forward.
Why, Noise. You trade Micro Stocks don't you? The people you're disagreeing with trade Indexes (ES etc), things which move inline with Economies. Economies don't whipsaw as much as Micros, so M.A.s have more significance for Indexes etc due to slower moving and eliminating Noise.
I came looking for a WXY thread and found this. I wanted to defend the Boy Wonder, but this Thread has made me pause that lol.
MA's works in chop, but change close to highs and another for lows. Buy low and sell high, 1-3 times, don't over stay. When MA based on closes going through bars sideways = chop
Don't ever draw support & resistance line, MAS on the chart, now and forever, till the end of time!!!!
I guess once upon a time long long ago, someone decided to smooth price using an average. Maybe they decided to average a week, so they created a 5 day MA. Then maybe others went further, 10, 20, 50, 100, 200 etc. Imo, there is zero logic in a MA200. But the masses use it and it becomes self fulfilling and they do work to a degree. Example: Price above 200MA has a higher probability of less volatility and being in an uptrend than below. 200 trading days is 40 weeks or 6.7 months or 0.56 of a year. Because an average is an average you need to divide by 2. Therefore a MA200 actually represents price 20 weeks ago or 3.35 months ago or 0.28 of the year. The nearest this represents is a Quarter of a year.
The theory is the 200dma moves more inline with the Economy - slow to turn. But MAs eliminate Noise too.
For Equity Markets, professional T.A.s are taught the 200dma is good for Primary trends and therefore the Economy. Unless you are able to use Fundamentals, like me.