i will use the following moving averages 4 period exponential,9 period exponential, 50 period simple , 20 period simple , 100 period simple. an entry will be considered when the shorter period exponential averages are 'far' from the other longer term averages AND if these longer term ones are also relatively flat showing the markets may be over extended in the short term.
Padu, are you switching from Brooks to an MA strategy? To be honest, I liked your own maverick "Padustyle" the best!
the idea behind using these averages is to measure what the market is doing very short term, short term, medium term,longer term and even longer term: basically whether the market is trending or ranging with respect to the average in review...and if trending how strongly it is trending... you can do the same thing by using price action but personally i have found it more difficult to use price action for this particular purpose.
NO i am using averages to determine the state of the market:is it trending or ranging. i only have to check the relevant average to know what many time frames is doing....for example the 4 and 9 are in strong up trend whereas the 50 20 and 100 are flat .... this is valuable information with less subjectivity as compared to using ONLY PA this is all very personal
if you cannot measure it you cannot mange it and i am using various lengths averages to measure things with less subjectivity. i am not really using a MA 'strategy' what i am using averages for is to determine when the market is short term over extended .... or when there is a short term trend or a medium term trend and if there is any divergence from other of my averages. this is all very critical information for entering and exiting trades
If you want to use averages to determine over extension maybe look at bollinger bands/keltner channels. Just a reminder that theirs no law saying that price can’t keep pushing past the bands.
this seems like a good example of a short term over extended market see chart..went long did not put stop want to average or scale in
I am sitting here, scalping the FESX on a quiet day, eating Ben and Jerry's and reading a new padutrader thread. Life could not be better