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Rick et al,
It should go without saying that a longer MA is less prone to a whipsawing
market. Various lengths are a fairly arbitrary choice and usually end up as
rounded numbers like 40 or 200. The exception being if you can find a
repeating daily cycle in the data. If you found a repeating daily cycle you
may find improved performance by using that number of days, this is
especially true of a Displaced MA. With Displaced MA's I sometimes divide
the cycle values by 2 and set the displacement to 1/2 and the length to 1/2
of the cycle. Otherwise for long term MA's I use 1/4 or 1/2 of a year (using
only trading days).
Brent
-----Original Message-----
From: Bando57@xxxxxxx <Bando57@xxxxxxx>
To: RealTraders Discussion Group <realtraders@xxxxxxxxxxxxxx>
Date: Sunday, January 17, 1999 9:14 AM
Subject: MOVING AVERAGES
>Id like to start a thread on moving averages...
>
>Fact: they are perhaps the most simplistic indicator...as to their
>effectiveness..thats up to the individual.
>
>Fact: no two traders seem to agree on what is a good length of time for a
>moving average..Of course different markets respond to different inputs.
Also
>intra day traders will certainly see things differently from end of day
>traders to positional traders if there is such a difference between those
>two...
>
>For example I attended a meeting between traders the other day...one trader
>swore up and down that a 55 day MA is the most important indicator. Not 40
>days...Not 50 days..not 90 days..not 200 days...55 days..
>
>Another trader in reference to crossover MA...used a 13 day..89 day..and
200
>day for stocks...and said this was after six months of testing that these
>particular numbers provided the most accuracy...
>
>So Id like to hear from other traders on their experiences with MA...
>
>Ive heard it said many times that for crossovers you need an 8-1 ratio..i
ask
>why?
>
>Presently I have been using a 4 day with a 32 day backed up with a
>confirmation MA of 90 days...Im not saying this is the holy grail. Im just
>saying I picked these numbers at random and liked what I saw. But im sure I
>could go back to Omega Supercharts 4 day.9day..with an 18 day long average
and
>perhaps be just as happy..
>
>Well hope there are some traders out there who would like to share some
>thoughts on Moving Averages.
>
>
>Rick
>
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