moving averages

[shane1404]

hi, i was just wondering what people think are the best moving average periods to use for short term spreadbetting. thanks shane

 

[scinvestor1]

Hi Shane,

I would say that there is no simple answer to your question as this differs according to what your bets are. Time interval, instrument, volatility and availlable historical data when you are testing your options are all factors to consider. I was experimenting with DJIA with 10 minutes time intervals. I used some backtests and I ended up with using fast EMA between 4 and 8 and slow EMA between 14 and 28 but only to confirm a trade either open or close. I don't think that EMA or any other moving average is a stand alone method to trade short term. I hope this helps.

Cheers!

 

[colion]

The optimum period and type of moving average (i.e., MA, EMA, WMA, etc.) will in general be market specific and most likely will change over time. For such indicators one either settles for an "OK" setting or optimizes routinely every week, month, etc. depending on how fast things change. Using adapting indicators may help to a certain extent.

 

[tomorton]

As set out above,the right answer will change over time as market conditions change and as these affect your mean holding period. While I would not recommend using price/MA or MA/MA crossovers as a means of identifying entries/exits, MAs can be useful for identifying trend directions and strengths. Maybe there is a way of identifying the optimum MAs: I would suggest short and long-term MAs could be useful here but one less than 3 x your mean holding period would probably give too much noise, while anything over 20 x this period would be meaningless. So if your mean holding period (under current market conditions!) would be 4 bars, the minimum MA should be 12, and the max 80. Purely my own conclusions, happy for these to be challenged.

 

[Splitlink]

hi, i was just wondering what people think are the best moving average periods to use for short term spreadbetting. thanks shane

They are very useful in a trending market but can be treacherous, more so on short TFs, because a follower of them can be whipsawed. If you can't indentify a trend I would say that averages are best left alone.

 

[NVP]

hi, i was just wondering what people think are the best moving average periods to use for short term spreadbetting. thanks shane

hey S

I like Ma based systems.......why ?

because they are the most simple and honest indicator out there and you can work around their shortfalls with practice

They give you the Trend (if any showing)..and the trend is your friend in trading

but which ?

well if you are focusing on 1 TF go for 2 minimum and 3 maximum

have 1 for the main Trend (High MA value)
have 1 for the intermediate Trend (mid-range MA value)
and have 1 fast MA to measure the fast moves and get you in and out of the trades (low MA)

also use the EMA on all of them....(Exponential) that increase the reactivity nicely

an example ?

well I prefer not to trade crossovers of the ma' above but when the Actual price is above or below all 3 ma lines

and beware Whipsaw so only trade when the price is also a healthy distance from the largest Ma (use a Ketner band perhaps on that Ma...or just set up some deviation lines on the Ma itself - easy in MT4 platform)

heres the E/U on 3 MA's (all EMA) and Ive created that band on the highest ma as a safety margin

20EMA (yellow)
50EMA(Blue)
200EMA (Red).and go into the indicator and add 2 levels to creat the Band


the arrows are the trades and also crosses are exits..but clearly yuo need to incorporate a more sophisticated exit strategy to optimise returns...target based trading is always pretty effective based on ATR's etc etc and ususally beats exiting on MA crosses in the long run

when the 3 mas get close thats the baddest risk area re whipsaws

and use it on any TF....who cares ?

hey dude...experiment, experiment, experiment !

N:smart:

 

[NVP]

heres a 5min of Friday.....

the problem is whipsaw and where the bands get very close...especially the 50 and 20 ema

again apply some common sense and let the trade breath....just keep experimenting but use the MA's as the foundation for direction and when the Price is either above or below all 3 lines

N :smart: