timsk
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Hi Merchster,
You can apply an MA to almost any type of chart and to all charts with a fixed periodicity, be it one second to one year. The same applies to the majority of technical indicators. As to which one to use, that will be governed by your trading methodology and objectives and will vary from one trader to the next.
Tim.
You can apply an MA to almost any type of chart and to all charts with a fixed periodicity, be it one second to one year. The same applies to the majority of technical indicators. As to which one to use, that will be governed by your trading methodology and objectives and will vary from one trader to the next.
Tim.
There is no answer to that question. There isn't a magic system that you're going to find if for instance you use a 50MA on a 15 minute chart, or a 100MA on tick charts. No such thing exists and you're wasting your time looking.
What settings do you use?
timsk
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Hi PB,
That very much depends upon what it is that I'm using the MAs for - and what information I want them to impart. By way of example, see the attached daily chart of $SPX with a 100 and 200 exponential moving average, dating back to 1997. As you can see, apart from a choppy period in the second half of 2011, it's done a pretty reasonable job of keeping position traders and investors on the right side of the prevailing trend.
Tim.
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So you started using that in 1997?
trendie
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The MAs certainly did well there.
However, it would be useful to apply those same settings to another clutch of indices as a baseline, to see if the MAs work in general or if these were a specific set for this particular index.
Just to muddy the waters, you can use a fast-MA but have it displaced by X-days.
Its not just the setting itself, but whether you decide to displace it as well.
timsk
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Eh? You've lost me PB. Obviously the chart didn't look like that back then, lol! Now, how about reciprocating and showing us a chart that works for you!
Tim.
Lee Shepherd
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Hi Merchster,
Forgive our friend PBoyles, he's a great guy at heart and looks to save many people a lot of wasted money but you will find that he is VERY realistic when it comes to trading so you may find some of his comments hurtful, nonetheless they are truthful.
With regards to MA's (moving averages).
Many people use these without the foggiest idea on why or what for.
They are arguably one of the most important indicators but yet at the same time mostly irrelevant for providing a clear cut signal, especially when used alone.
Firstly you need to fully integrate yourself with the workings of moving averages then work them out to the time frame of a particular market. IE, a moving average cyclical will be different from one index to another let alone from one market to another like Forex to commodities etc.
Moving averages will also (obviously) change as the target market becomes larger or smaller.
Once you have discovered what type of trader you are: day trader, scalper, long term etc then you can start to back test this in your required instrument, ie, FTSE 100 or any one of the many, many indices or commodities or forex etc etc, or one of the many tens of thousands of stocks available today. Be aware of what I said above, this cannot be used as a stand alone indicator.
You will also need to understand the weighting (if so) of the target market and how the price is worked out. this is crucial as will and can throw out your MA cross overs at certain times. Also be very aware of the news that affects this target market and when this comes out as this will also have a detrimental effect on the indicator.
Many times people can get good signals only to find out that it is wrong more times than not and yet they don't understand why, when they reverse it the same negative effect happens and they still lose money. If they start to make money from the get go then it is usually by luck of chance than trading skill. Once you have it figured out be prepared to change it. Just like the markets are always adapting to new ways of making money, you have to also.
The number of variations within a typical MA can be as vast as the lottery, multiply this to the tens of thousands of different instruments, indices, stocks etc and you'll soon figure that even if a magical number did exist, it would take several life times to figure this out before even testing it back or live, however, common sense should tell you that there is no magical number I'm afraid. Just like the lottery, the number keeps changing.
Of course all this is probably a load of bollox and to be honest you'd probably much prefer to hear this.
MA is very simple to use, just apply an MA of 10/20/100 to a 15 minute time frame and watch for the cross on a 2 minute for entry and exit, 15 min for confirmation. Wait for it then trade it and in no time at all you will be making millions.
Trade your way to financial freedom and give up the 9 to 5 rat race. You can trade anywhere in the world from your yacht or holiday home/s.
All the best,
Lee
Eh? You've lost me PB. Obviously the chart didn't look like that back then, lol! Now, how about reciprocating and showing us a chart that works for you!
Tim.
My point is that you can take any indicator and go back and curve fit it to an instrument or timeframe that makes it look like it 'works'. There was no way of knowing in 1997 that the combination you posted would have worked.
Its like looking at the football results and then trying to fill in the pools coupon, unless you can travel back in time its useless.
0007
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Apologies if I've got this wrong but I get the impression that you are putting the cart before the horse in that you are prioritising moving average over timeframe. Moving average is only a "view" of price and crossover systems can add value in the right circumstances. But before you get to that it is (in my opinion) much more important to look at various timeframes to see what's going on -- working from large to small gives the big picture. If you do that then you can have success with numerous values of moving average and eventually fine tune your "system" to suit. But to start playing around with various values of moving average -- and every person will give you the "best" value -- without knowing what is happening to price in various timeframes, will only confuse you.
Your question implies that you are on the start of the learning curve (we all started there) and if that is the case you do need to be careful of using a system without understanding what it is trying to do ( I've been there and I bet many others have also).
I would suggest looking purely at price in various timeframes and then adding moving averages to see what (if anything) they tell you - you may even discover some that give you profitable trading. Best of luck.
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timsk
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Hi trendie,
The chart I posted is as simple and as basic as simple and basic gets. However, as you highlight quite correctly, it can quickly get complicated - the waters can get very muddy indeed! It's for that very reason that - IMO - the chartist needs to have a clear idea what it is that s/he wants the chart (and any indicators applied to it) to show. Different periodicities with displaced settings and what have you will produce different results. I know you know all of this, I'm just saying for the benefit of the OP and anyone new to this stuff.
Tim.
timsk
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Hi PB,
Just to be clear, are you saying that in your view all technical indicators and subsequent analysis of said indicators and charts is useless?
Tim.
I'm saying the OP is not going to find a magic combination of MAs that 'work', I think that is what he is expecting. Posting a sample of something that happened to work in hindsight is not helping him, its only encouraging him to look for the magic number to use on his charts.
timsk
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Hi PB,
Let me repeat my question: are you saying that in your view all technical indicators and subsequent analysis of said indicators and charts is useless?
Tim.
I'm not offering the OP (or anyone else) a 'magic' ciombination that 'works'. I made that clear in my initial response.
I posted the chart for two reasons - the first being in reply to your very specific question about what I use. I deny in the strongest terms possible that I'm encouraging him (or anyone else) to look for a magic number - and resent the accusation. Your comment could equally well apply to any chart ever posted on this or any other site. If I could post a chart showing future prices - I would - but I've checked with my charting provider and they don't offer them.
Let me repeat my question: are you saying that in your view all technical indicators and subsequent analysis of said indicators and charts is useless?
Tim.
