which moving avgs do most traders use?

Discussion in 'Technical Analysis' started by cashclay, Apr 28, 2018.

  1. cashclay


    I ve heard so many answers for this but the one that keeps popping up is the 10 50 200 all at once. do you guys agree?
  2. Max E.

    Max E.

    intraday the only one i use is "VWAP", on daily charts the only two i use are the 50 day and the 200 day Simple moving average.
    Last edited: Apr 29, 2018
  3. JSOP


    Simple and Exponential. I have used Recursive before but I find its effectiveness is a bit overrated.
  4. expiated


    You have answered your own question (the one in the title of this thread). As for whether I agree, I’m probably the only person on the planet who doesn’t, which is why I kind of see myself as a sort of Aristarchus of Samos or Nicolaus Copernicus of Forex trading.

    ....Expiated’s “numerical price prediction” moving average(s)...
    ScreenHunter_7628 Apr. 29 02.09.jpg

    As a beginning trader, I found that the line segments appearing on a traditional line chart were so jagged that it was easy for me to mistake a temporary pullback in an upward or downward trajectory as a wholesale reversal in the overall trend.

    In my opinion, the best solution to this problem was to replace such line segments with one or more moving averages, which I regarded as the most ideal solution to the problem in that moving averages reduce the number of confusing saw-toothed lines by foregoing the tedious task of connecting each individual data point, opting instead to calculate the average of a specified number of data points, and then drawing line segments that connected these alternate figures instead.

    My goal was to smooth out the jagged line that results from plotting raw data to eliminate as many “head fakes” as possible, while also avoiding the problem of generating a line that lagged so far behind the actual trend that the validity of the resulting moving average was seriously compromised, rendering the line virtually useless.

    It just seemed to me that logic would suggest the possibility of arriving at a single line (moving average) within a given time frame that removed the maximum number of false positives while tracking the overall direction of price as closely as possible before it began to lag so far behind price’s actual trajectory as to render it statistically inaccurate.

    These were the lines I sought to discover through meticulous analysis, carrying out an exhaustive study that I believe was tantamount to running thousands of computer models comparing how closely each of a wide variety of moving averages came to reflecting an exchange rates’ actual destination, settling on the single best measure for conveying a given rate’s ultimate intentions within the context of specific time frames.

    This approach to identifying the trend was much simpler than the alternate method of identifying higher highs and higher lows, or lower highs and lower lows, with the goal being to come up with a technique that eliminated as much subjectivity as possible. Toward that end, I hoped to make use of a methodology similar to the computer models used by meteorologist to make weather forecast. This meant collecting precise, up-of-date, quantitative information about the current state of affairs at a given “place” and time, and interpreting the data to make accurate predictions.

    However, instead of analyzing air pressure and temperature, cloud location, wind direction and velocity, and humidity…my focus was on moving averages, average price ranges, historical support/resistance levels, repetitive price patterns, and market structure—all in multiple time frames.

    Ultimately, the system used simple moving averages, simple moving average envelopes, and a proprietary indicator similar to Nicolas Darvas’s trading ranges to simulate the equations; wave functions and representations; and grade point, spectral, and coordinate models used in weather forecasting.

    As with numerical weather prediction, there were intrinsic limitations to my system that lead to error growth with time, so I apply this approach exclusively to intraday trading. Of course, the moving averages must be converted accordingly when moving from a chart of one time period to a chart of another, so they definitely are NOT your standard 10-, 50-, and 200-period moving averages.
    Last edited: Apr 29, 2018
  5. tomorton


    I use 3 EMA's, very similar time periods to yours, 20, 50 and 200. But the more interesting question is what to use them for.

    For the purposes of my (trend-following) strategy, when they stack in the appropriate sequence, price is in a potential trend. So, from top down, 20, 50, 200 makes a potential uptrend. From top down, 200, 50, 20 makes a potential downtrend. I ignore potential entries off price action which might be called a trend if the EMA's aren't in these sequences.

    There are other very helpful uses for MA's, but an entry signal based on a cross-over is not one of them.
    birdman and Statistical Trader like this.
  6. Xela


    Are you asking because you want to try them, or to make sure you avoid them, knowing that "most traders" are losing? [​IMG]
    spindr0, boomdog, comagnum and 2 others like this.
  7. cashclay


    Im want to use it for both intraday and swing trading. Im under the understanding that the more traders use a specific indicator the more likely the trade will go in the direction thats a bit more predictable.
  8. Xela


    I promise I'm not trying to offend or disparage you (though I know it may appear that way), but the questions you're asking now, and the underlying trading-related beliefs that inform and produce them, are no more realistic or productive than they were nearly 3 years ago when you first started asking them here. I know that nobody in a trading forum wants to hear this, but honestly, trading is not for you. I know you're an intelligent, educated, well-traveled young guy, but trading is truly your blind spot: you'd be so much better off and happier finding other dreams and courses to pursue with your life. Sorry! [​IMG]
  9. schweiz


    As a daytrader I see no reason at all to use MA's. They are worthless to me.
    murray t turtle, Sprout, Xela and 2 others like this.
  10. wrbtrader


    Considering you want to follow the heard and do what most moving average traders are doing...10, 50 and 200 are commonly used.

    Also, I notice whenver I see TV show analysts...they seem to plot 10, 50 and 200 moving averages for trading and investing.

    Yet, its all easily backtested and I don't remember anyone ever discussing any backtested results that was usable for trading purposes or investing purposes.

    #10     Apr 29, 2018