Moving Averages

Hi

I would like to understand more about which MA's and their type's (eg Exponential, Smoothed etc ) are best suited to which Timeframes / Currencies etc and how best to combine them (eg is it limited to just fast crossing slow etc) Everyone seems to have their own favorite methods here so I want to see if I there might be some common ground

Many thanks

If i had to choose the one i would use EMA (Exponential Moving Average) on a shorter time frame due to EMA Responding to changes quicker resulting in you catching trends earlier.

I use both, spent some time studying charts with EMA and SMA on a demo account trying to work out what happens when you get a MA cross over when i first started trading as was told it would be one of the easiest things to get my head around when starting!

BabyPips will give you the basics and im sure someone with more experience than myself will be along to give you some useful info soon!


M

If you want to measure something you use a ruler or a tape measure. You can use inches, centimetres, yards, miles, acres and so on.

Most indicators are just a form of measurement. Because what we want to measure is all over the place, it is nice to set an average, which changes with every new value.

MA crossovers are points on that ruler where a trader can make a decision to enter a trade. What value these are is up to the trader and his/her experience with price action around that value and that time of the trading day.

You don't really need two ma's to give a crossover value. If the price crosses a single moving average line that is a signal. What do you think if the moving average is an upward line but the price is below it and moving down? What do you think if the price then shoots up through that line and and a bar forms above the line, without touching it? Choose a good trending pair and observe what the price does when it crosses the 100sma or the 200sma on the hourly time frame. Which is the more reliable signal? How often does it bounce off that line? What would happen if you used that line as a trailing stop? It's well worth observing past charts to see what would have happened. Use simple moving averages. The others have limited extra value.

These measuring sticks are valuable tools to help an experienced trader enter and leave trades. Well worth researching.

By the way, "measuring stick" is not a joke. They are used by such as boat builders where curves and angles can not be measured by conventional tools. A similar analogy.

I usually use the Exponential moving averages as I find them more dynamic and responsive to market movement.

One good way of using them will be to plot a 50, 100, 200 and 400 EMA on all your time frame.

If there are stacked nicely with good angle and separation in a particular direction, you are in a good trend and you can then place your trade based on the direction of the trend.

Maybe one approach would be to take a suitable EMA from a higher TF and then with adjustments plot it on a lower TF from which you trade (ie identify trend from the higher TF but plot it this on the lower TF) Anyone do this and how would the higher EMA need to be modified

Thanks

I do this for H4 and D1 EMAs onto the M15. I originally used a multiplicative factor but then moved to using a MTF MA.

Do a search and you should find one.