most popular MA

hello,

may i know what MA's are most popular among FX traders,and why exactly they works?

and please also mention the time frames on which particular MA works great.

This is the explanation I heard from a very experienced trader. Things like MAs are done that way because that is the way they have always been done. What he meant was that a lot of FX traders were former stock market traders and they generally used 20, 50 and 200 day MAs when trading stocks. 20 days is about 1 month of trading. 200 days is one year and 50 is almost a quarter.

Whether this makes any sense on charts other than daily is questionable. A lot of traders do it and probably again the explanation is that other traders do it, so why wouldn't I?

I use 9EMA and 18 EMA on 5 min and 1 hour time frames
I use 8EMA and 16 EMA on 1min time frames.

these settings are going well. basically I have seen, found that any MA will work in certain situations and time frames. You need to test out different settings and types on your idea to see which suites your method of trading.

The 9 and 18 were originally weighted but I found the EMA type suited me better. on a 1 min times frame they were a little slow to react so the drop to 8 and 16 solved that issue.

keep playing around till you find a comfortable area.

Thankyou quite informative...currently i am using 200 MA as well 200 EMA and seems price always tends to move arround it.

what time frame do you use for 20 and 50 MA's?

Well I didn't say that I use them. Mostly I see these used by others, especially the 20. I trade on the 15 TF so I use 5, 10 and 20.

There are two schools of thought on this...The prime thought is that since the banks and big boys use 200 etc then use the same as they do. I use a 233 ema..no real reason except it is a fib MA and i like Fibs. If you plot 200, 233 or even 175 you will see that there is not much difference between them. People go with 21, 25, 34, 50, 55, 62, 89, 144, 150 for a whole host of reasons.

Because people will accept what they see and understand, they will look for reasons why one number will work over another number. They will support it with logic and backtesting and it will work for them. But the mind fools us into seeing what we want to see and so we create a system based on a particular MA. You could probably take any number and create a system out of it that will work. One such good system was MA 1 shifted 8. Great system and works.

I have 10, 30, 50 and 200 EMAs.

Watch how price reacts to them, regardless of TF. Its all the same behavour.

Only trading when the PA is under or over the 10 has saved me from heaps of false entries. Its even better if they are all nice and tidy and in order...

Watching a retrace bounce off the 30 and even the 50 and then come back my way has saved me from heaps of false exits.

Swing trading? Great place for re-entries!

Keeping an eye on the 200 ensures you are trading the right side of the trend. Also, when the PA is tangled up with the 200, don't expect plain sailing on around 75% of cases. Its going to be rough, especially on the shorter TF's.

Unless you are trading a strategy that requires something specific like when EMA 12.359 crosses EMA 98.23468 go long if the wind is blowing in the right direction, these four EMAs will serve you well.

PPP

On daily I use 20/50/200. In order, 20 above 50, 50 above 200, i'll buy touches of the 50 then wait for the day to finish and move my stop to break even. Then I place another buy at whatever price the 50 is at. Another touch of the 50 puts me in again. If the previous trade is taken out at break even i'm automatically back in with a new position. Sometimes i'll get lucky and collect a few positions right at the 50 EMA that dont get stopped out. From there out I just ride the stop behind the 50, for days, sometimes weeks. For short positions do the same in reverse.

PS. My stops are always 50 pips/1% Risk.

PSPS - This works best on EURUSD. Others are too volitile.

Ma are confusing to me.. Doesn't price just follow the S&R lines anyway,

People who play in forex don't act like machines , as you all know - ANY indicator reflects only past evens and this moment. You can only use indis as patterns for your predictions only .

So true...

However, for the most part, unless you sit at a dealer's desk, post humorous indis are all we have...

We deal in realms of probabilities and guesstimates.

Longer term MA's show the probability of trend continuation and the strength of the push behind the trend.

Shorter term MA's reflect the probability of trend change.

In Guppy's words, MA's reflect the difference between the trader and the investor.

My experience has been that a Stoch or RSI or whatever may signal a change in the trend, but the move will seeminly struggle until the MA's line up correctly, at which point, the PA seems to gather momentum and true direction.

Now, the question is: which came first, the chicken or the egg? Did the movement of the PA determin the MA's or did the MA's lining up determin the ongoing PA?

As far as I am concerned, as long as one reflects the other with honest and reasonable probability, does is matter?

The humble MA is one of the most basic indis, however, it is also one of the most obvious and easily traded.

A lot of traders use them, making them a self-fulfilling prophecy.

I have never traded them on thier own, but it would be interesting to see if it could be done...

The tick chart only supplies us with four pieces of data: Open, low, high and close. Any indi built off those four numbers will always be one step removed from the price action itself.

The further we move away from OHLC, the further we move away from the truth of the market.

It is the same with any indi. Its only the degree of seperation between our subjective reality and the truth of the market that varies.

Until someone comes up with tomorrow.mq4, we will have to deal with various degrees of lag.

PPP

EDIT: Of course, so much is dependant upon your traded time zone. Get to know your timeframe intimately.

Pick the most traded pair in your trade time, and get to know the market move. I trade late Asia/early Euro session, which has hallmark moves, almost as regular as clockwork.

I know that during my timezone, there is a high probability of three moves. I don't know how many pips they will yeild, but I know that they will happen, around 80% of the time. Asia will have a little flick, either with or against the day long Asian trend, then a retracement, and depending of if the retracement breaks the trend or not, it will either continue to move away from the Asian trend or continue it through the Euro/Ldn sessions. Whilst this might sound quite vague, there is a pattern to it.

The 'little flick' is generally good for 10 pips, although 15 - 25 is average. The retracement can yeild 20 pips most days, and when the next move comes in, its generally the trend for the night, and depending on the day (pivots, 000 lines, the way the wind is blowing etc), there could be 100 pips in it.

I am certain that this is not an isolated phenomena. Break up your trade times to see if 'set moves' occur at certain times. You may be surprised.

It may not count for much, because you don't know which way it will turn (in many cases) or how long it will run on for, but if you know WHEN to expect a change, all that remains is the accurate dealing with the change itself.

PPP

All M1,

200ema is my strongest and more market turnable MA I've got.

Currently using 1440ema (1day), 720ema, 60ema, 26ema also.

Accuracy below this drops off to much for me so :-

I duplicate the 26ema via S10 charts with 156ema and also add a 42ema and 10ema to the S10 charts, which gives me nice fast entrys and exits when required.