I'm curious as to why the period "200" is so popular, since there are 240, not 200, trading days in a year.
Ignored
Trend traders uses this 200 EMA
I have seen a trader in another forum and in his trading system he uses 200 EMA and only go long if price is above 200 EMA with long signal by his system but if his system gives him short signal while price is above 200 EMA than he dont go short and enters only in long trades & vice versa
Main thing is this its effective to identify the main trend
market maker software uses emas to release and time their orders. 200ema from all timeframes can be connected to the climax of news spikes/interventions. it's kinda uncanny. have a check on charts
I understand your point about 240 vs 200 but all things start somewhere and typically it is based on some long ago "sense of ease". Prior to computers all charts were drawn by hand and the "gurus" at the time ended up using 200 as it is easier then say 240 to do the required math with. It could even be done in your head if need be.
Anyway, so computers come along and like all new concepts, people at first only automate what they are doing but do not change what they are doing. So now they can calculate and draw the 200 "faster". Eventually, someone does some analysis and realizes that there are other MAs that would work as well but by now the 200 is ingrained in the lore of TA. The teachings of the earlier gurus are passed along and people react when they see the 200 being approached. Now it has become self fulfilling and there is no way to stop it. It would take a whole generation of new analysts with no exposure to the 200 to actually cause a change.
But who wants to be the first one to change?
As it is, I use the 233 because I like Fib numbers and if you plot the 200, 240 and 233 you will see that there really is no difference between them.
