Moving Averages

[Zenda]

It's Timescales that count

Moving averages are some of the best indicators one can use - but it must reflect the timeframe in which you are working - equal importance must be given to this which is reflected in your trading style. The synergy with both is the most important factor in generating entry and exit signals - a combination of MACD & Histogram is one of the simplest and best. (in all timeframes) - the strength shown by the histogram is of major importance- Z

 

[BBB]

Does anyone use displaced MA's?

This is one concept I dont understand as some say they are 'forward looking'. How can this be so? Surely todays MA will be at the same point as the displaced MA projected forward??

Where am I going wrong, or do people use them in other ways?

 

[Grey1]

Moving averages are the most useless trading indicator available to traders as the settings to reduce noise, are totally arbitray and subjective..

regards

 

[volatileN]

Moving averages are the most useless trading indicator available to traders as the settings to reduce noise, are totally arbitray and subjective..

regards

Agreed! I think my last post on moving averages (with the downloadable chart of % returns for different periods) proves this. Any profits from them are incidental.

 

[Skimbleshanks]

BBB:

There are a few people who find that displaced MAs are their cup of tea. There's never a right way and a wrong way, as you know.

And in case anyone doesn't know what displaced MAs look like, here's an example of displaced MAs on ES, on the 5 minute chart.

The red line is the standard 10 period moving average

The blue line is the 10 period MA offset by +3

The green line is the 10 period MA offset by -3

 

[bonsai]

Grey

"It ain't what you use, it's the way that you use it
That's what gets results."

(apologies to Cole Porter)

 

[TheBramble]

..thought it was Bananarama, but then again....

 

[options]

Totally agree with the not what you use, but how you use it statement.

Of course if you use ma crosses as is, you will always be behind the market action.

Sometimes that is no bad thing. Gives the 'noise' time to settle down. Great in trending markets for longer periods. No good of course to the scalper/short time frame trader.

Displaced mavs have the same input by filtering 'noise'

Then you have the predictive abilities, that can also come with mavs and macd; dependant on settings.

"Beauty is in the eye of the beholder."

 

[bonsai]

Bramble

"You can not be serious !"

(you know who)

 

[GruntnoWay]

I use moving averages to good effect. As for saying they are subjective, isn't all technical analysis subjective? I usually use 3 periods which tell me the trend. I think they are better than trying to draw 'subjective' trend lines. I use them on 1, 15 60 and my daily charts.

I do not shift them + or - as this only serves to fool you and does not improve signals.

 

[hagadol]

Could someone confirm what "Displaced Moving Averages" are ?

 

[GruntnoWay]

Some people lag or lead their averages by a few days but I think this only works with hindsight. Averages should be drawn on same day as the calculation. Anyone got any other advice?

 

[bonsai]

Moving averages should be centred at the mid point of the current calculation.

so a 15 day ma relates to day 8.

if you plot it as relating to day 15 or any other day then it's displaced.

e.g
plotting it at day 12 is an attempt to allow for noise so that a cut back through such an ma is sometimes considered a sell signal etc

there are endless variations.

 

[GruntnoWay]

Moving averages should be centred at the mid point of the current calculation.

so a 15 day ma relates to day 8.

I disagree. If you do that, then you can't use corssovers because the moving averages are always 8 days short of the latest price. And you can only use odd period averages.

 

[bonsai]

what is it you disagree with ?

 

[GruntnoWay]

I did quote you. I don't agree moving averages should be centred because they stop short of the end of the data. See above.

 

[Grey1]

We have had similar discussion on MA on this BB

http://www.trade2win.co.uk/boards/showthread.php?s=&threadid=7782&highlight=FFT

 

[GruntnoWay]

Thanks Grey1 very useful

 

[bonsai]

Grintnoway
You seem to have misunderstood.
what you use is entirely up to you.
I dont think I recommended any variety

I was explaining what a displaced average is.
If you want to plot it in relation to the last day, that's fine.
But it still relates to day 8.

 

[TheBramble]

Notwithstanding all of the above (that's a great line, isn't it!) MAs are fairly good for establishing the trend. But then again, you can get that by looking purely at the price action.

And it's true that the 14, 22, 90 and 200 period MAs are used even by traders who 'don't use MAs...' but know others do.

However, MAs are lagging indicators and as such, however misplaced, displaced or centred on the middle of the time period or not, they don't give you much of an future indication of anything much at all.