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Bob>In conclusion: a moving average is, by definition, a lagging indicator.
There are other indicators that are anticipatory, but not the m.a.
Very concise and accurate description of moving averages. They are the
most used of all technical indicators, and this is fine, as long as one is
very much aware that one is looking at where a data array has been-like
looking in a rear view mirror. With all of the indicators available, and
new ones are devised each day, the only real things are price and volume.
Now, if one can read what the market is saying and have a good exit for
those times when one reads incorrectly, with the discipline to execute a
pre-planned action, then one trades well. The left side of the chart is
the easy part. It is the right side that presents the challenge.
Al Taglavore
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> From: Bob Webb <Webb.Bob@xxxxxxxx>
> To: metastock@xxxxxxxxxxxxx
> Subject: Re: Lag In Moving Avg
> Date: Saturday, February 10, 2001 1:01 PM
>
Jim,
I think I know what you mean by the question, but when you think about it,
it is not possible. A "moving average of X periods" is, by its very
definition, an average of X number of previous prices (O,H,L,C) or some
other value (e.g., see the use of m.a. in the MACD). If price (e.g., Close)
is reversing from being in an upward trend to moving lower, then it will
take a certain number of Closes, before the moving average of X periods
will begin to also reverse direction. Thus, a moving average is, by very
definition, a lagging indicator.
There are, however, two ways (and perhaps more) to decrease (but not
remove) the lag in a moving average:
(1) make the "X" in a "moving average of X periods" a smaller number. Thus
it will take a fewer number of lower Close values to turn the moving
average around.
(2) give greater weight to the most recent X values and lesser weight to
the older X values. This is accomplished by using a weighted or exponential
moving average.
The danger, however with using either of these above methods (or a
combination of both), is that you will have a greater number of whipsaws.
Hope this helps.
Bob.
At 11:54 AM 10/02/01 -0500, you wrote:
>Aside from Jurik's proprietary method, does anyone know of a way to
>formulate a way to get the lag out of a moving average.
>
>Thanks,
>
>Jim Barone
>
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Robert L. Webb
Webb.Bob@xxxxxxxx
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