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DISPLACED MOVING AVERAGES?



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> Group:
> 
> I was wondering if someone can address this controversy?  I read where
> William Brower wrote an article circa August, '98 on the subject of
DMA's.
> In the article, he goes through an example which improves returns sig-
> nificantly, and then states "This result is typical.  As
counter-intuitive
> as
> it seems, displaced moving average systems usually outperform the
standard
> moving average system."  
> 
> Earl Adamy, a name most of you will recognize as a respected computer
> expert and trader, posted the following to our forum:  "I did detailed
back-
> testing of DiNapoli's displaced MA's using daily S&P cash data from
> 1970-1997
> using MA's from 3 to 25 in increments of 2 and displacements from 1-7 in
> increments of 2.  I could find no displaced MA which provided
consistently
> profitable entry and exit on both long and short side or on either side
> indiv-
> idually.  Like about every fixed frequency indicator I've ever tested,
they
> did
> well in trending markets and got whipsaawed badly in trading markets."
> 
> I was exploring this idea initially from the book  "Martin Pring on
Market 
> Momentum", page 115 which states:  "This concept of leading moving
averages
> ws promoted by Gartley in the 1930's........He believed that the best
> combination of
> moving average and lead came from a 25-day simple moving average advanced
> by
> 3 days.  He came to this conclusion from research covering the stock
market
> from 
> the late 1920's to the early 1930's--a period that covered major bull,
> bear, and tran-
> sitional markets."
> 
> Another individual whose advice I respect has stated that he is  not a
fan
> of DMA's
> and has 'proved' it for himself with a similiar exercise using SC's
> optimization
> report.  He states that the DMA's are a carry-over of the past when
> calculation 
> capability was limited.
> 
> I don't understand how Brower can come to an opposite conclusion on DMA's
> and would appreciate any expert commentary which can explain this dilema.
> Thank you.
> 
> Charles
> 
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