| Welcome Guest, please sign in to participate in a discussion. | Search | Active Topics | |
Registered User
Joined: 3/9/2005
Posts: 15
|
If I set up 2, 10 day moving averages, on a price graph, making one simple and the other exponential. After watching this video, it said that exponential gives more weight to recent days. So if exponential would move through a simple. Could this be used as and indicator for short term or rolling stock plays? thanks..
|
|
Registered User
Joined: 11/16/2004
Posts: 105
|
Whitelinerider,
This is true, it will give you a tight crossover. I like to experiment with some none market standard MA such as other than 10,20,50,100,200 day or period depending on a securities volitility. Some stocks like to use a particular moving average for support or resistance as well. The MA sometimes becomes a self fullfilling proficy pivot point because so many traders will use them and thus trade around these prices at crossovers and support/resistance levels.Backtest a 10 day,50 day & 200 day moving ave on a few stocks & I bet you will find better than half that break thru each support level will hug the next one.In conjunction with the MA test some volume indicators to see the crossover relationships. 
|
|
Registered User
Joined: 12/19/2004
Posts: 457
|
What are you trying to accomplish by using a simple and exponential moving average crossover system?
All moving averages are derived from price. A moving average, regardless of how it is calculated, is an attempt to smooth out price fluctuations.
Exponential moving averages do weight more recent data more heavily. This moving average will turn down before a simple moving average would. This allows tighter stops, at the risk of more whipsaws.
The exponential moving average has the theoretical advantage in that it isn't quite as affected by the change between the last value and the first value. Instead of going from a weight of 1 to 0, a data point gradually decreases in its effect on the moving average, and is eventually dropped off.
I don't think cross overs between the 2 averages would mean anything. The 10 period simple moving average would be slightly more volatile because the last data point moves from a weight of 1 to 0 as it is removed from the average. That is the cause of crossovers between the averages, and is meaningless.
|
|
Worden Trainer
Joined: 10/1/2004
Posts: 18,819
|
I recomend you check out these videos:
Understanding Moving Averages - Part I, The Basics
Understanding Moving Averages - Part II, Using Multiple Averages
Understanding MACD
Scan for stocks bouncing in a lateral channel
EasyScan Design for Breakouts and Bouncers
- Craig
Here to Help!
|
|
Registered User
Joined: 3/9/2005
Posts: 15
|
Thanks for the feedback. And Craig, you suggested those videos earlier to me, and I have watched the first 2, that is what got me thinking. So i posted my idea here to see what others thought. And I got one says yes and one says no. But I am going to apply it to some history and papertrades to see. thanks to all..
|
|
Worden Trainer
Joined: 10/1/2004
Posts: 18,819
|
When you mentioned "rolling stocks" I thought the last two on the list would be of particular interest to you.
- Craig
Here to Help!
|
|
Registered User
Joined: 1/28/2005
Posts: 6,049
|
You can also create an indicator for this.
Click-"CHART TEMPLATE"-"ADD INDICATOR"-"INDICATOR"
"MIDDLE"
XAVGC10-AVGC10
CLICK "CENTER ZERO LINE"
CHOOSE A COLOR IN UPPER RIGHT.
You will see the indicator in the middle window.
When it moves up the exp is pulling away from
the simple.
You can also click on the indicator and sort by it.
|
|
Registered User
Joined: 1/26/2005
Posts: 1
|
Surely the 10 day moving averages used this way provide very little information. Crossovers are too insignificant to be relevant since latest data used in the calculations is the same for both simple and exponential moving averages, however all depends on your timeframe. For rolling stocks, I like to use 10 and 20 day exponential moving averages, together with stochastics (15,2,2). Never buy unless oversold and stochastics ticked up on last trading day. I would also use other indicators to confirm a change in direction.
|
|
Registered User
Joined: 3/9/2005
Posts: 15
|
Diceman,,what was this indicator u showed me suppose to show??
|
|
Registered User
Joined: 1/28/2005
Posts: 6,049
|
The diff between the MAVs.
XAVGC10 is the exp avg. (of the close)
AVGC10 is the simple avg.(of the close)
( XAVG is EXP, AVG is simple,
C means "close" and
10 is the length )
When you type the indicator
XAVGC10-AVGC10
you are subtracting the 2 avgs.
So if exp was 20.17 and simple
was 19.98 it would plot .19
The plot will move up as the exp pulls
away from the simple, and move down as it
moves toward the simple.
You would be looking at the spread of
the 2 avgs.
|
|
Registered User
Joined: 1/28/2005
Posts: 6,049
|
Whitelinerider
If this is still unclear goto "HELP",
"TELECHART HELP TOPICS",
"PERSONAL CRITERIA FORMULAS"
"PERSONAL CRITERIA LIBRARY"
and look at moving average.
What you are doing is creating an indicator
that displays the diff between a 10 bar
exp avg and a 10 bar simple avg.
|
|
|
Guest-1 |