Moving Averages

This is a discussion on Moving Averages within the Technical Analysis forums, part of the Methods category; Originally Posted by EnlightenedJoe Maybe you need to be bothered. When the shop wins, money disappears from your wallet. If ...

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Old Nov 7, 2017, 2:21pm   #25
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Originally Posted by EnlightenedJoe View Post
Maybe you need to be bothered. When the shop wins, money disappears from your wallet. If you learn from the winners, how they do it, why they do it, when they do it, what they say, why they say it, when they say it, you might become a winner yourself.

When you are not bothered by the winners take money from you, you will remain a loser.

A quick way to identify winners is to answer the question of where did the money go ?
I don't think it's right to assume someone is a loser.

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Old Nov 7, 2017, 2:25pm   #26
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I don't think it's right to assume someone is a loser.

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There are some shop stated figures that 80% of their customers lose. I am not assuming but using fact. So if someone is not bothered by the shop taking their money, they must be in that 80%.
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Old Nov 7, 2017, 2:30pm   #27
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There are some shop stated figures that 80% of their customers lose. I am not assuming but using fact. So if someone is not bothered by the shop taking their money, they must be in that 80%.
Your comments have been duly noted

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Old Nov 7, 2017, 2:32pm   #28
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Originally Posted by dbphoenix View Post
A word or several of advice, particularly if you're new to trading forums.

If you're new to trading, you can't be expected to determine whether or not MAs are of any value since you are new to trading. Your options, therefore, are pretty much limited to doing your own testing -- which can take a great deal of time, assuming that you know how to do it, and considerable effort -- and seeking the opinions of others. The opinions of others, however, are essentially worthless unless those who think MAs are great tell you exactly how the MAs are used, at least enough so that you have something to test. If someone tells you for example that MAs are great if you know how to use them but doesn't tell you how to use them, you're back where you started.

You can spend a year or two or five or ten futzing with varieties of moving averages and the near-infinite number of settings in order to compensate for an inability to tell up from down. But if you already know how to tell up from down, there's no need for you to spend/waste time on moving averages. Or any kind of indicator, for that matter. Yes, a simple indicator or two can be useful for scanning if you're interested in trading stocks. Otherwise, you run the risk of being led into a great many blind alleys and even a maze or two by making judgments based on the unfounded opinions offered on trading forums. All trading forums.

If you want to understand the market, study the market, not what complete strangers say about the market.
I agree. I like to keep developing my strategy, that's all.

I think this thread should be closed before it gets out of hand

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Old Nov 7, 2017, 2:55pm   #29
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Another great post! Esp, If you learn from the winners, how they do it, why they do it, when they do it, what they say, why they say it, when they say it, you might become a winner yourself. Beautifully put! And this is exactly what I do with your posts and a few others here! Try to read b/w the lines.

Do you mind I use this?? PS if you want me to remove it from my sig I will Joe.
Do what you like. Itsnotpossible already quote me. I am used to it.
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Old Nov 7, 2017, 3:11pm   #30
 
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I agree. I like to keep developing my strategy, that's all.

I think this thread should be closed before it gets out of hand
Or you can just abandon it and start again with a journal, which are self-moderated (you can, for example, block people on your Ignore list). Little of value has been posted here, so you have nothing to lose. And there are people here who actually trade and make money (the two rarely go together), so don't be too quick to choke off sources of useful information.
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Old Nov 7, 2017, 3:54pm   #31
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I agree. I like to keep developing my strategy, that's all.
I think this thread should be closed before it gets out of hand
Hi kinsorted,
Welcome to T2W.

Depending on what you mean by a thread getting out of hand, some would say that's a T2W specialty, even a hallmark of sorts. Your question is a very good one and as relevant today as it's ever been, so there's no need for the thread to be closed.

dbp can always be relied upon to post solid and useful advice when it comes to trading and, in broad terms, I agree with what he's said here. By contrast, I rarely agree with anything EnlightenedJoe ever says, but that's because 90+ of what he posts makes no sense to me at all! But, I accept that that may say more about me than it does about him. Be that as it may, I do agree with his comment that most traders use indicators of all kinds (MAs included) the wrong way. Typically, this involves using them to generate buy and sell signals. Using MA's to do this will get you into a trade late in a trending market and out late after price has hit 'the bend at the end'. That's not great, but it's waaaay better than using them in a range bound market which will see you losing money hand over fist.

So, the above begs the obvious question: how can - or should - MAs (and indicators in general) be used? To answer this, check out the Essentials Of Technical Analysis Sticky and scroll down to the heading: 'Indicators and the Mechanics of TA' in post #2.

My personal view is that MAs can be useful as a means of bench marking where price is now - relative to it's average over N periods. Traders who employ a reverting to the mean strategy often use them in this way. I did this quite early on when I first started trading and, after three months my account was up 26% and I'd already hit my profit target for month 4. Then came the fatal newbie error. I was so convinced that I had a totally robust strategy, that when price deviated beyond the statistical norm (i.e. further away from the moving average than it 'should'* have done), I responded in kind and deviated from my risk management strategy. Mistake, big mistake. Huge. The net result was that I lost 70% of my account in less that 24 hours. Whilst I clearly made some monumental mistakes, I don't think my use of the MA was one of them.

Other T2W members use MAs to good effect - check out threads/posts by tomorton and darktone for examples.
HTH.
Tim.

* A little tip: if you ever find yourself thinking that price 'should' do A or 'should' do B - your thinking is wrong and you're a short step away from losing (a lot of) money. There is no should when it comes to price movement - it does what it does and you need to be prepared for every eventuality.
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