How reliable are moving averages? | Forex Factory

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How reliable are moving averages?

  • #1
  • First Post: Jul 3, 2017 8:01am Jul 3, 2017 8:01am
How reliable is moving average ?
Here I used SMA 365 on D1.

See the screenshots and difference between two brokers.
What do you think ? Why is this diference ?

What is more reliable SMA or EMA ?
Attached Image (click to enlarge)
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  • #2
  • Jul 3, 2017 8:04am Jul 3, 2017 8:04am
Probably because the moving average is just too large, and the small differences add up and it's a large difference because it's daily.

EMA just means that the more recent the candle the more impact it has, most people believe it to be more accurate.

How good are moving averages? It all depends on what you use them for.
  • #3
  • Jul 3, 2017 8:10am Jul 3, 2017 8:10am
Quoting euroswiss
Why is this diference ?
The very 1st thing you should verify is the broker server time. If your daily candles don't have the same time, the datas (OHLC) used for the MAs aren't the same.
MT4/MT5 EAs/Indicators/Alerts coder
  • #4
  • Jul 3, 2017 8:19am Jul 3, 2017 8:19am
Quoting FerruFx
{quote} The very 1st thing you should verify is the broker server time. If your daily candles don't have the same time, the datas (OHLC) used for the MAs aren't the same.
Thanks you. Yes that is correct i see a difference 3 hours.
What should I do ?
  • #5
  • Jul 3, 2017 8:29am Jul 3, 2017 8:29am
Quoting euroswiss
{quote} What should I do ?
There's nothing you can do if you need to use these 2 brokers. TFs from 4 hours and above are the ones with the time issue.

The deal would be to find the broker(s) suiting your need according to your analysis on these different charts.
MT4/MT5 EAs/Indicators/Alerts coder
  • #6
  • Jul 3, 2017 8:33am Jul 3, 2017 8:33am
Quoting FerruFx
{quote} There's nothing you can do if you need to use these 2 brokers. TFs from 4 hours and above are the ones with the time issue. The deal would be to find the broker(s) suiting your need according to your analysis on these different charts.
Thank you.
  • #7
  • Jul 3, 2017 8:49am Jul 3, 2017 8:49am
Quoting euroswiss
{quote} Thank you.
MT4/MT5 EAs/Indicators/Alerts coder
  • #8
  • Jul 3, 2017 10:50pm Jul 3, 2017 10:50pm
not only broker time, but more important on Forex.com you seem to have a sunday bar not for FXPRO
so the 365 SMA is not calculated with the same bars!!!
  • #9
  • Jul 4, 2017 1:03am Jul 4, 2017 1:03am
Quoting ForeverNewb
not only broker time, but more important on Forex.com you seem to have a sunday bar not for FXPRO so the 365 SMA is not calculated with the same bars!!!
Yes that's a matter of broker time. If the 1st candle of the week is on sunday, there's a sunday candle. For brokers with a different time and shifting there 1st candle on monday, no sunday candle.
MT4/MT5 EAs/Indicators/Alerts coder
  • #10
  • Jul 4, 2017 4:40am Jul 4, 2017 4:40am
Quoting FerruFx
{quote} Yes that's a matter of broker time. If the 1st candle of the week is on sunday, there's a sunday candle. For brokers with a different time and shifting there 1st candle on monday, no sunday candle.
Yeah this seems to be the cause for the difference. Also, there is no better moving average. They all work better at some points than at other points. Depends on what you prefer. There is no magical indicator.
  • #11
  • Jul 24, 2017 12:18am Jul 24, 2017 12:18am
Quoting euroswiss
How reliable is moving average ? Here I used SMA 365 on D1. See the screenshots and difference between two brokers. What do you think ? Why is this diference ? What is more reliable SMA or EMA ? {image}
Based on my personal trading experience, EMA is much reliable to use! No doubt, moving average is very useful trading indicator; but depending on only technical tool is not enough here! Yes, you have to know details about fundamental, for conformation or additional technical support really it works.
  • #12
  • Jul 24, 2017 12:34am Jul 24, 2017 12:34am
It's lagging but can predict the big movement. but always too many false signal
Risk comes from not knowing what you're doing.
  • #13
  • Jul 24, 2017 7:45am Jul 24, 2017 7:45am
Quoting euroswiss
How reliable is moving average ?
Quoting euroswiss
What is more reliable SMA or EMA ? {image}

It all depends on exactly what you mean by "reliable".

All moving averages are equally "reliable" in the sense that they all display exactly what's calculated according to the input data from which they're calculated.

I suspect that what you're really asking is something more like "To what extent do they have any 'predictive' powers of forthcoming price direction?" and that's much harder to answer. Some would say "none at all"; others would say "a little bit, but very variably so according to time-frames, volatility and a range of other parameters".

EMA's respond more quickly than SMA's to the most recent changes in price, and the way they're calculated is therefore "faster-responding"; the corollary to this, of course, is that if you're trying to use them for trade entry signals, they're also going to give more false signals.

In general, I think it's fair to say that moving averages of all kinds are more helpful in determining the overall trend within their current time-frames than they are for determining when to enter trades.
  • #14
  • Jul 24, 2017 11:15am Jul 24, 2017 11:15am
I love Moving Averages. I use SMA as my main arsenal in trading. People who say they are lagging don't know the full potential of SMA
Multiple SMA Trader
  • #15
  • Jul 24, 2017 11:18am Jul 24, 2017 11:18am
Quoting euroswiss
How reliable is moving average ? Here I used SMA 365 on D1. See the screenshots and difference between two brokers. What do you think ? Why is this diference ? What is more reliable SMA or EMA ? {image}
How reliable is price .. ?
  • #16
  • Jul 24, 2017 4:37pm Jul 24, 2017 4:37pm
Quoting BlackNapkins
{quote} How reliable is price .. ?
The price is the base of all calculations done by indicators ... and even the price is lagging ... as it is already the result of some actions taken by the "big boys".

Price is not showing what is happening ... but what happened.
MT4/MT5 EAs/Indicators/Alerts coder
  • #17
  • Jul 25, 2017 9:25am Jul 25, 2017 9:25am
Quoting FerruFx
{quote} The price is the base of all calculations done by indicators ... and even the price is lagging ... as it is already the result of some actions taken by the "big boys". Price is not showing what is happening ... but what happened.
That is my point sir...
If the price is an effect of what happened how about MAs?
  • #18
  • Jul 25, 2017 9:53am Jul 25, 2017 9:53am
Quoting BlackNapkins
{quote} That is my point sir... If the price is an effect of what happened how about MAs?
MAs - or any other indicator - are the end of the chain ...
MT4/MT5 EAs/Indicators/Alerts coder
  • #19
  • Jul 25, 2017 10:29am Jul 25, 2017 10:29am
Quoting FerruFx
{quote} MAs - or any other indicator - are the end of the chain ...
different chains have different length...
  • #20
  • Jul 25, 2017 10:36am Jul 25, 2017 10:36am
Reliable for what? For me, it depends on how and what you use MAs for.

Trade safe and prosper.

KP
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