Moving averages settings for day/swing trading

[traderdredd]

Hi,

I'm about to start trading as a swing trader (seeking to be in/out of trades no more than 5 days).

Can anyone suggest the periods ans time frame to use?

Regards,
traderdredd

 

[rathcoole_exile]

instrument ?

 

[shadowninja]

200EMA as a windsock. Not for signals. Use price action to determine entries.

 

[traderdredd]

instrument ?

Hi rathcool_exile,

Thanks for your speedy response.

regards,
traderdredd

 

[rathcoole_exile]

well ? rather than sarcastic messages; are you going to tell us which instrument you plan on trading so we can maybe advise a suitable response to your question, or we have to guess if it's ES, Gold, Oil, Corn, GBP/JPY, Bananas, MadDogs ?

I don't know why I bother when i get shyte like this off newbies

 

[traderdredd]

well ? rather than sarcastic messages; are you going to tell us which instrument you plan on trading so we can maybe advise a suitable response to your question, or we have to guess if it's ES, Gold, Oil, Corn, GBP/JPY, Bananas, MadDogs ?

I don't know why I bother when i get shyte like this off newbies

Hi rathcoole_exile

Please accept my most sincere apologies. I interpreted your statement "please read" as directing me to the reading material "Mastering the Trade"... hence my response, which was not intended to be sarcastic.

I plan to spread bet. I have decided to trade UK stocks (ftse 100 as my starting point). I thought I would start as a swing trader (eventually moving on to day trading).

I want to use moving averages as one of my indicators, but I'm not sure of whether to use 10,14, 20, 50,100 or a combination as my settings. My strategy is to be in/out of trades within 5 days.

Also, given this strategy what time frames do you think would be best suited?

Many thanks for your time, and once again, apologies for causing you distress.

Regards,
traderdredd

 

[rathcoole_exile]

ok sorry for the misunderstanding.
i can't help you with ftse, but there are plenty of people on here who can, now they know what you're looking at.
I'm not a big fan of MAs or even indicators so probably not the right person to advise you even if I knew anything about the UK markets.
But what I can do is strongly recommend that you read Captain Currencies "3 Ducks" system on this forum.
While it's obviously aimed at forex traders, the logic can still be readily applied to indices etc. and should help answer some unanswerables.

And a final tip, yes do read the book that's mentioned in my signature. It's US-centric as well as looking at global commodities, but a very worthwhile read imho

good luck

 

[traderdredd]

ok sorry for the misunderstanding.
i can't help you with ftse, but there are plenty of people on here who can, now they know what you're looking at.
I'm not a big fan of MAs or even indicators so probably not the right person to advise you even if I knew anything about the UK markets.
But what I can do is strongly recommend that you read Captain Currencies "3 Ducks" system on this forum.
While it's obviously aimed at forex traders, the logic can still be readily applied to indices etc. and should help answer some unanswerables.

And a final tip, yes do read the book that's mentioned in my signature. It's US-centric as well as looking at global commodities, but a very worthwhile read imho

good luck

Thanks for recommending Captain currencies... I shall check it out straight away.

I will also read the book that's mentioned. (I learned the basics of trading through the Online Trading Academy which is US-centric.This wetted my apetite to pursue trading via technical analysis).

Thanks for your time.

regards,
traderdredd

 

[tomorton]

Can't recommend MA to give entry signals, they always lag and are no more dependable than any other individual indicator, but can be relevant in confirming your assessment of what the trend is. Match the trend to your chosen trading time frame - no good looking at the 200EMA and classing the trend as up when your holding period might be just 4 days.

MAs also act as curving trend lines so can emphasise areas of support or resistance - this just makes potential s/r more visible along a path that is not horizontal or straight-line point to point, it doesn't make it happen.

Also a useful quick filter when looking for shares to buy (short) - momentum-following strategy might be to immediately disregard anything FTSE350 below (above) the 200EMA, as so many other market players use the same crude filter.

 

[traderdredd]

Hi tomorton,

Brilliant! That's extremely useful, because I'd forgotten about using MA as confirmation of a trend and not as an entry signal.

In terms of my time frame (which will be 1-5 days), would it be more effective to use the 20, 50 & 100 ema?

 

[tomorton]

14 might be not too small, you'll probably find that with a short holding period like 5d, an MA of 50 or above will not often be in touch with price (the FTSE100 200EMA only crossed the index price 3 times in 2008-9). But remember there's no magic number: use an average that trialling shows is appropriate for your style and the instrument.

 

[traderdredd]

Thanks everso tomorton. I feel more confident and will definately not be using MAs in isolation.

Kind regards,
traderdredd

 

[hwsteele]

Hi traderdredd,
If you are interested in getting the most out of using MAs then I highly recommend the following book...
The Profit Magic of Stock Transaction Timing by J.M. Hurst
It has some very good information in it. It also is not that expensive.
I believe you can get it for about $30.00 at Traders Press.com

HWSteele

 

[PokerBrat]

TraderDredd, I would suggest you work out your system before you start trading. And then paper trade it for a while until you feel comfortable with the entry and exit signals it gives you.

If you want to swing trade stocks, you can find a very simple method at this site:

Learn Swing Trading | Get a Jumpstart on Trading Stocks

 

[traderdredd]

Hi traderdredd,
If you are interested in getting the most out of using MAs then I highly recommend the following book...
The Profit Magic of Stock Transaction Timing by J.M. Hurst
It has some very good information in it. It also is not that expensive.
I believe you can get it for about $30.00 at Traders Press.com

HWSteele

Hi HWSteele,

Thank you for your recommendation. I shall check it out.

Kind regards,
traderdredd.

 

[traderdredd]

TraderDredd, I would suggest you work out your system before you start trading. And then paper trade it for a while until you feel comfortable with the entry and exit signals it gives you.

If you want to swing trade stocks, you can find a very simple method at this site:

Learn Swing Trading | Get a Jumpstart on Trading Stocks

Thanks everso PokerBrat,

Simple is what I need at this stage. I shall check your recommendations.

Kind regards,
traderdredd.

 

[traderdredd]

TraderDredd, I would suggest you work out your system before you start trading. And then paper trade it for a while until you feel comfortable with the entry and exit signals it gives you.

If you want to swing trade stocks, you can find a very simple method at this site:

Learn Swing Trading | Get a Jumpstart on Trading Stocks

Hi PokerBrat,

Checked out the above. I found it enlightening with an excellent matter-of-fact approach that incorporated simplicity (which suits me).


The tutorials are easy to follow and kept me engaged for the most part.

Thanks everso,

Regards,
trderdredd

 

[Peaceful_Warrior]

Hi Traderdredd,

I personally would workout your system first then back test it, then forward test it with a demo account and find out where you have area's of concern and see what you can do to make these area's of concern disappear.

With the ma's I would suggest using two ema's the first one being a 5 ema on the close and the second being a 8 ema on the open.

This is a very very simple system using ma's and you will get a lot of entries and nice runs with it but when its at a swing point sometimes it can give you a lot of false entries.

Sorry forgot to tell you the entry signals, short is when the 5 ema crosses down over the 8 ema and long is when the 5 ema crosses up through the 8 ema.

There are multiple exit strag. you will need to workout which one siuts.

I personally trade using indicators and do pretty well for myself but I would not trade just using ma's alone too many false entries.

cheers

 

[traderdredd]

Hi Traderdredd,

I personally would workout your system first then back test it, then forward test it with a demo account and find out where you have area's of concern and see what you can do to make these area's of concern disappear.

With the ma's I would suggest using two ema's the first one being a 5 ema on the close and the second being a 8 ema on the open.

This is a very very simple system using ma's and you will get a lot of entries and nice runs with it but when its at a swing point sometimes it can give you a lot of false entries.

Sorry forgot to tell you the entry signals, short is when the 5 ema crosses down over the 8 ema and long is when the 5 ema crosses up through the 8 ema.

There are multiple exit strag. you will need to workout which one siuts.

I personally trade using indicators and do pretty well for myself but I would not trade just using ma's alone too many false entries.

cheers

Hi Peaceful_Warrior,

Thanks for your advice.

It would be great if could comment on the system, I'm currently back-testing;- which uses 3 MAs (5 sma, 10 ema & 200 sma - all at the close), Williams %R, volume and candlesticks.

I thought the time-frame for entries/exits should be daily, because of my preferred trading style (swing trading, though I want to day trade in about 6 months).

Would you say that this is a reasonable starting point for swing trading?

Kind regards,
traderdredd

 

[Peaceful_Warrior]

Hi traderdredd,

Pm me your systems entry, management and exit criteria and I will chuck it up on the monitor and check it out for you.

As for day trading in approximately six months or so, just relax and when you feel right to start day trading thats when you start to look at it but make sure you have the results on the board first.

Is it a good place to start from well yes as you can only start from where you are at, but seriously workout what you want out of your life first and then see if the price your going to pay for it is worth it or not.

Myself I always scalp to enter a trade and then manage the trade according to my indicators which either keeps it as a scalp or when certain criteria are met, turns the trade into a day trade.

When I first started trading my idea was to make enough to put food on the table by the time I was retired at 65, as it turned out I made enough to retire in my early thirties and haven't looked back.

Trading is the only thing that I know of that you can make good easy money once you have done the hard work. The big issue with a lot of new traders is that they believe they have the skills to run with the big boys and soon realise once their into the game that the big boys wont stop to see if your are ok. So do the work first otherwise your just cannon fodder.

Be prepared to be Micheal Jordan, study yourself not to see where you went wrong but to see where you can improve yourself as a trader.

Cheers