What MA's do you use and why?

Hi all, my first post.

I've been reading a lot and learning a lot and slowly developing a system and trading style that suits me. I'm mainly geared towards following price action and prefer to keep the screen clean and simple rather than cluttered with indicators. However I feel it makes sense to keep a couple of moving averages up there to show the general short term or longer term trends present in the price action. If only I could decide which ones were the most practical.

So for example, recently I've been looking at the 15M time frame a lot. A 24 EMA seems to show the short term trend while switching to the 1H chart it then shows how the market has been moving over the previous 24 hours. Or something like that. I also like having a 100 EMA on the screen. But these are fairly arbitrary choices. I've tried a number of different MA's whether simple, exponential, or weighted, all in response to particular systems offered on this board. I'm still trying to work out which ones would be most useful to me and conversely, what it is I can best expect an MA to provide. So I'm hoping it may be possible to distill all the MA systems and advice into one simple thread.

I'd be especially interested in hearing what the more experienced traders feel about MA's.

Perhaps posters would like to state the MA's they use, the time frames they use them for, and of course the reasons why. It's not necessary to describe your whole trading system, but just detail how the MA's you use are most valuable.

Much thanks in advance,

Bob

200EMA on any timeframe. It's like a compass. The price action is the map.

200 SMA, it's universally used in stocks, forex etc

and 25 and 50 EMA because it is a part of my system
(note: for further study go to EMA25-50 thread)

Hey Bob & Welcome to the Board.

I agree that it is Standard Practice to often use 2 MA's to get a pictorial view of the Short Term/Long Term Price Comparison.

The question is; How long is "Short Term" & long is "Long Term?"

Hopefully the attached img may help.
Pick Your Chart TF down the Left then vector accross to the Longer TF you wish to compare it to find the MA that represents that Period.

Let's say you are looking at a 15Min Chart & want to see how it compares to 24 Hrs ago {1 Day}.

Locate the "15 Min" Row on the Left Column then scroll accross that Row until you are in the "1 Day" Column. You should now be on a cell that reads "MA 96".

In other words, if I put a 96 period MA on a 15Min chart, the plotted line will APPROXIMATE the Daily MA of that Chart.

Add a 576 Period MA to the Same Chart & I now have a 15Min Chart with a Daily & Weekly MA PLotted.

Hope this helps.

All good advise. The 200 MA is universal, you should definately have that on there. Bemac, your spreadsheet is interesting, I'll save that in case I need to refer to it.
Bobsmith, moving averages are a great tool. Which one to use is a personal preference. You should study many different combinations on your favorite timeframes, and see how price reacts around them. One MA is not neccessarily better than the next. Just choose a setup and stick with it until it becomes second nature to you.
The 15 minute chart I'm looking at has a EMA 50 & 128 for Support / Resistance.

What's strange is that the 200ma being so universal and doesn't even show up on that attached img. Am I missing something here?

thx,
todd

OK, it looks like the spreadsheet is saying that, if you want to see a 15 minute MA on your 1 minute chart, you multiply by 15. A "15-minute 200 MA" would be displayed as a 3000 MA on your 1 minute chart. If it's a simple moving average (SMA) it should come in at the same level. Exponential MA's will throw this off a bit.

More simply,.... a 200MA on 1H can be seen on your 15-min chart by setting an 800MA.

Unless you are going to trade actually using an MA, I wouldnt even bother with them (I contrast myself in sorts later in the post). You state that you are interested in Price Action, does this mean you are looking at pin bars, head and shoulders and such? If so, I would just determine your short and long term trends yourself. If I ask "What is the long term trend of the EUR/USD?", what would your answer be? So long as you are not wishy-washy about the response, you are probably right ... as you responded in terms of how you want to trade. Right now the long term trend for me on that pair is UP, while the GBP/USD is DOWN.

In terms of my use of MA, I suppose "Price" answered for me. To quote "One MA is not neccessarily better than the next" I would agree with this. No intent to degrade, but if you put a 200 EMA up on a chart 1/4 of the time price will seem to be supported by it, 1/4 of the time price will blow right through it as if it isnt there, 1/4 of the time it will go through it and then be "supported" by it and the other 1/4 of the time it will be supported by it and then blow through it a little later. You could put a 220 EMA up and the exact same thing will happen. If anyone has spreadsheet/photo data dating back five years for one pair to show otherwise ... please do so.

Further, "Just choose a setup and stick with it" - I like this too. After years of trying many different indicators on many different TFs I discovered that nothing worked. Well, everything probably did work, for at least one person, but not for me. I discovered it isnt how you trade a "system", as there really isnt one (Citadel was one of the most profitable hedge funds in the world and part of their group lost over 30% of all their clients funds in one year, 2008) using their super-quant, super-secret "system" that when things were going good everyone wanted to get their hands on. It isnt the indicator(s) you use, it is how you vision things and how you manipulate things around that vision. You can use a single indicator, a group of indicators or just numbers in a spreadsheet. Now, that isnt saying people dont have fundamentally better approaches than others to begin with in terms of their spreadsheet, price and indicator setups or what have you, it is just that I believe by manipulation even a 5MA crossing a 12MA could work for some folks while it fails for 95%.

To actually answer the question you asked, I use a SMA, 317 on the major pairs on 4hr and daily graphs. No reason for that number other than I picked it at random and it isnt too low and isnt too high for how I want to do things. Truth be told I could trade the exact same way without that line or any other at all, I dont like to try and time things myself though. Maybe later. And if you are curious, no, I dont simply trade the cross of the line ... I have been bored the last couple of months until recently though.

I niether endorse nor negate MA's, I merley posted my view that they should be relevant rather than "I don't know Why" OR "200 MA is Universal"... Think about that...

Q) What would it take to make a MA Universal?
A) Hmmmm... Accuracy, I guess....
Q) And How Long a Period would you take to Measure that Accuracy?
A) As Long as I Could...

What would you say if I told you that a 200 MA was deemed a Constant via a 5 Day {Open Minute to Close Minute} Trade Week of the Futures, Options, Indicies & Stock Pits & now the game has changed?

You do the math; I'm tired.

Ooooh, Ooooh, Ooooh, I know; Forex Skewd the whole thing up by being Open Six Days and therefore shifting ALL known Time to Time measures.

Guess what; They still have the Seventh Day to save their A$$es but by then they may be regulated....

Stay in tune with what you are endeavouring to accomplish...

You're asking the wrong question, and anybody who gives you a numeric answer is pulling it out of his or her arse. The question you should be asking is 'does the market which I intend to trade have a significant tendency to trend', if so, pretty much any MA within reason will do, conversely if the market does not have this tendency every setting of MA is pretty much equally useless.

Please Define "within reason..."

btw. I resemble that remark...

Is this just because MA's do not, neccessarily, coincide with Your Readings of EW?

'Within Reason' = able to exploit afore mentioned trending behavior in a profitable way.
Sorry, I'm unfamiliar with the term 'EW'.

PA not MA.

Price Action regulates and leads the Moving Averages.

Cheers

OK. {I think (Within Reason)} I understand how you Trade.

No Math...
PA NOW with No respect for where PA Has Been.

Cool. Hope it continues to work for you (Beyond Reason).

I think that is why we have eyes!

Pretty simple to see where price has been without a moving average to show us.

I guess it all depends on the trader, trade with indicators, MA's, etc.

All that counts is knowing what works for each individual trader.

Touche!

I do appreciate the chart of MA's you posted on post #4

Thanks.



I think LT would argue MA's are important, this is a chart you could use to trade if your watching MA's.

Enjoy

Is that a Guppy I see before me?

If so; the Ultimate in MA Trading.
Never actually found a way to make it make Me some money.

Please tell me how YOU Trade it.

Here is a very simple use of MA. This is a 7MA open LWMA and a 7 MA close LWMA on a 4H chart. The dotted lines separate each week. You can see the red MA makes a very good trendline to follow price action. When the blue line crosses you close and go the other direction. You also use the red line for you stop loss or take profit and move it up/down as price moves. You trade 2 or 3 times a week as an average. Simple but effective combines simple trendline trading with an MA cross following price action. Hope it works for you.

This is what works for me....... 88 cross