Re: Lag In Moving Avg

[Bob Webb <Webb.Bob@xxxxxxxx>]

Al,

You wrote: "The left side of the chart is
the easy part.  It is the right side that presents the challenge."

Well put! My involvement in this forum is out of personal interest (I use 
Metastock personally), but for work I use CQG, and one of my 
responsibilities is to provide technical comments on the natural gas market 
as well as formulate and execute hedging strategies. One of the things I 
say the most to those in the corporation is: "Don't tell me how to trade 
the middle of the chart. You can only trade the right hand side of the 
screen!".

Bob.


At 02:51 PM 10/02/01 -0600, you wrote:
>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
>----------
> > 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
> >
>
>
>==============+==============
>Robert L. Webb
>Webb.Bob@xxxxxxxx
>===============+=============


==============+==============
Robert L. Webb
Webb.Bob@xxxxxxxx
===============+=============