Well, we all know why we use mobile averages, to cut the noisy. More long the period is, less the noisy could deceive us.
The is a statistic idea that on the long period the noisy will tend to 0 becouse it is casual and so you have 1/2 possibilities to go up and -1/2 possibilities to go down.
Ok, let's explain the idea.
If we have an 80MA we know the trend can't change as in an 5MA. We all know why, becouse the other 80 periods keep the average stable on the short term (a short term compared with an 80MA). So, if we saw at 5 periods on an 80MA is quite easy to guess where the line will go becouse the average will keep stable in a so short term. In this type of MA we can think the average we have at the beginning as the average we have at the end of the fifht period.
Now, I know that in this 5 periods the stock could be also very variable, but we know what the average will be at the end and this could be a very useful tool.
If during the first 3 periods the pips go down, we have more probabilities that in the other 2 will go up to reach the average.
I know that this idea is quite similar to the discovery of hot water, but there is an other thing.
The 5 periods (as the x periods to be more formal) are the 5/80 of the 80Ma and there importance on the final average is just 5/80 as said. So, we have:
Final average(FA):
75a/80+5b/80=FA
a is the average of the 75 periods, b is the average of the last 5 periods.
we know 75a/80, so we have only b and FA to find. But we said we could think FA=75a/80, so know we need only to find b.
b= 80/5(FA-75a/80)
b is a guide line, if the moving is stable it should be igual to b, but the moving is not stable and here we have the profits. If the currency pick up the guide line since the third period (for example) we can really expect the currency go down in other 2.
What you think?
The is a statistic idea that on the long period the noisy will tend to 0 becouse it is casual and so you have 1/2 possibilities to go up and -1/2 possibilities to go down.
Ok, let's explain the idea.
If we have an 80MA we know the trend can't change as in an 5MA. We all know why, becouse the other 80 periods keep the average stable on the short term (a short term compared with an 80MA). So, if we saw at 5 periods on an 80MA is quite easy to guess where the line will go becouse the average will keep stable in a so short term. In this type of MA we can think the average we have at the beginning as the average we have at the end of the fifht period.
Now, I know that in this 5 periods the stock could be also very variable, but we know what the average will be at the end and this could be a very useful tool.
If during the first 3 periods the pips go down, we have more probabilities that in the other 2 will go up to reach the average.
I know that this idea is quite similar to the discovery of hot water, but there is an other thing.
The 5 periods (as the x periods to be more formal) are the 5/80 of the 80Ma and there importance on the final average is just 5/80 as said. So, we have:
Final average(FA):
75a/80+5b/80=FA
a is the average of the 75 periods, b is the average of the last 5 periods.
we know 75a/80, so we have only b and FA to find. But we said we could think FA=75a/80, so know we need only to find b.
b= 80/5(FA-75a/80)
b is a guide line, if the moving is stable it should be igual to b, but the moving is not stable and here we have the profits. If the currency pick up the guide line since the third period (for example) we can really expect the currency go down in other 2.
What you think?