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Investors Moving Averages

  • #21
  • Aug 11, 2012 11:24am Aug 11, 2012 11:24am
Quoting mctrade
But nonetheless I have eyes that can see price reactions in the charts. I´m watching the charts every day and from my point of viewing prices often reacts at typical moving averages like the 50, 100 or 200 MA, that's a fact.
Is "that a fact" ?

For your own sakes (and I mean it with good intentions), on your spare time, go and find information on psychology, specifically regarding on subjective bias on how your eyes deceives you... because it will save you lots of money.
  • #22
  • Aug 11, 2012 11:45am Aug 11, 2012 11:45am
Quoting CrucialPoint
Is "that a fact" ?

For your own sakes (and I mean it with good intentions), on your spare time, go and find information on psychology, specifically regarding on subjective bias on how your eyes deceives you... because it will save you lots of money.
Hi CrucialPoint,

as I said, from my point of viewing it is a fact that prices often reacts at these typical MA`s.

Maybe not always and maybe not always exactly on the point, but very often.

Otherwise I must be blind.

Ok, I will search for some informations about psychology and subjective bias now.

No idea what you mean at the moment now.
It ain`t no big thing, but it`s growing.
  • #23
  • Aug 11, 2012 11:57am Aug 11, 2012 11:57am
Hi again, mctrade,

There is no "magic" in those MA's (200, 100, 50) that some pro traders use.

And there is also no wonder why the 200 MA is met again and again.
It's really simple:
The 200 MA represent a year (360 calendar days = ~200 trading days or Bars on your chart).
The 100 MA is half a year (same logic as above).
And by now you propably know that 50 MA is two calendar months.

G.
  • #24
  • Aug 11, 2012 12:20pm Aug 11, 2012 12:20pm
Quoting gg53
Hi again, mctrade,

There is no "magic" in those MA's (200, 100, 50) that some pro traders use.

And there is also no wonder why the 200 MA is met again and again.
It's really simple:
The 200 MA represent a year (360 calendar days = ~200 trading days or Bars on your chart).
The 100 MA is half a year (same logic as above).
And by now you propably know that 50 MA is two calendar months.

G.
Hi gg53,

thank you for the informations.

I think it`s useful to have them in the charts and use them as you said as guidelines for the trend and for SL and TP.

In the week during the London and the New York session I often watch and follow the infos on forexlive.com.

I think they are professionals and they also have these MA`s in their charts.

Best regards and have a nice weekend.
It ain`t no big thing, but it`s growing.
  • #25
  • Aug 11, 2012 12:22pm Aug 11, 2012 12:22pm
Everyone uses MVAs, from retail traders to buy-side institutional traders. There are many different ways to use moving averages, from short term trading to long-term investing. What I often see is that many retail traders try to use moving averages in short term trading, however the problem with this is that the market is very noisy in the near term. The under-experienced trader sees a moving average cross and decides to enter the market, then price comes back only to take them out. IMO, this is not the way moving averages are meant to be used. Moving averages are much more reliable in the longer time frames, such as 8h and daily. They are more reliable in the fact that on these time frames, prices show more of a susceptibility to sustaining trends.
  • #26
  • Aug 11, 2012 12:29pm Aug 11, 2012 12:29pm
Quoting Forexgogo
No offense but I think you are missing the point here. MAs are great indicators for sure that tell you entry/exit points. I guess you already notice it (otherwise you wouldn't ask the question above).

The question you should ask is, "how can you use MAs to find entry/exit points?"

It can't be more insignificant if the pros use certain MAs, or not. The important point is to ask yourself how to use what MAs because price actions obviously react MAs on the chart (they reflect the market psychology -- tons of books available to learn it).

So, what...
Hi Forexgogo,

thank you for your comments as well.

It helps.

Best regards.
It ain`t no big thing, but it`s growing.
  • #27
  • Aug 11, 2012 12:44pm Aug 11, 2012 12:44pm
Quoting mfoste1
Everyone uses MVAs, from retail traders to buy-side institutional traders. There are many different ways to use moving averages, from short term trading to long-term investing. What I often see is that many retail traders try to use moving averages in short term trading, however the problem with this is that the market is very noisy in the near term. The under-experienced trader sees a moving average cross and decides to enter the market, then price comes back only to take them out. IMO, this is not the way moving averages are meant to be used....
Hi mfoste1,

I think you`re right.

I also use a trend following method based on weekly, daily and 4 hour timeframes.Not only based on MA`s but including them.

That`s my style of trading and for a beginner, I think it`s easyer to trade the longer term without too much noise instead of daytrading.

Thank you and best regards as well.
It ain`t no big thing, but it`s growing.
  • #28
  • Aug 11, 2012 12:53pm Aug 11, 2012 12:53pm
Using MA's crosses is like:
driving a car forward while constantly looking at the rear view mirror.
The results are known...

MA's shows you history - and even that is lagging...

Learn currency correlation, price patters, supply and demand, etc.

Good luck trading.

G.
  • #29
  • Aug 11, 2012 1:02pm Aug 11, 2012 1:02pm
Quoting mctrade
Hi gg53,

I think they are professionals and they also have these MA`s in their charts.
Just a friendly advice:

Forget about what "pros" do, if you want to make profit out of markets.

Read books about market psychology if you're so concerned about what other people do.

It is just not a good concept, separating pros from amateurs -- once you get fixed to it, you will be an amateur forever...

In my book, traders who make profit constantly (no matter how big/small it is) are all "pros" in your wording. There are only two kinds of traders -- successful ones and the others.

Best
  • #30
  • Aug 11, 2012 2:34pm Aug 11, 2012 2:34pm
Quoting mctrade
Hi CrucialPoint,

as I said, from my point of viewing it is a fact that prices often reacts at these typical MA`s.

Maybe not always and maybe not always exactly on the point, but very often.

Otherwise I must be blind.

Ok, I will search for some informations about psychology and subjective bias now.

No idea what you mean at the moment now.

I may not be any expert, but i think alot of people out there have a perception of price reacting with MA, so they try to find the magic number of how price "react" to the holy grail of MA. To be exact, price will "always" react to the MA, because "Average".

Eg, Give a number of price 123, 456, 789, price will definitely cross one of these price. Be it 5 series of numbers, or 10000 series of numbers, it will definitely cross one of it.

I will rather find a MA a guide to a trend, but not necessary a must.
The only winner is the one who survive the longest...
  • #31
  • Aug 11, 2012 3:09pm Aug 11, 2012 3:09pm
Quoting Forexgogo
Just a friendly advice:

Forget about what "pros" do, if you want to make profit out of markets.

Read books about market psychology if you're so concerned about what other people do.

It is just not a good concept, separating pros from amateurs -- once you get fixed to it, you will be an amateur forever...

In my book, traders who make profit constantly (no matter how big/small it is) are all "pros" in your wording. There are only two kinds of traders -- successful ones and the others.

Best
Hi Forexgogo,

I agree with you,
there are two kinds of traders, successful traders and unsuccessful traders.

From now I will only talk about successful and unsuccessful traders.
It ain`t no big thing, but it`s growing.
  • #32
  • Aug 11, 2012 4:17pm Aug 11, 2012 4:17pm
It depends on what you are using the MAs for. As mentioned by mrgreen... if you're looking for big stop clusters, use the most common big Daily MAs... such as 50, 100, 200... (sma) in combination with obvious s/r levels. It makes sense to use the most watched big round numbered ones for this. You can take historic data and mess around with it and see what you find. Check different pairs too.

I also know some professional funds use proprietary crossovers, usually of the weighted variety.

Personally I don't really use traditional stuff, but I note the big ones. I like TL's and vol indicators.

good luck.
  • #33
  • Aug 11, 2012 5:28pm Aug 11, 2012 5:28pm
You are looking at MA's interaction with price in the wrong way.
Price DOES NOT interact with MA.
MA is the RESULT of price!
Think about it.

G.
  • #34
  • Aug 11, 2012 5:41pm Aug 11, 2012 5:41pm
Forget about what "pros" do, if you want to make profit out of markets.

Read books about market psychology if you're so concerned about what other people do.

It is just not a good concept, separating pros from amateurs -- once you get fixed to it, you will be an amateur forever...

In my book, traders who make profit constantly (no matter how big/small it is) are all "pros" in your wording. There are only two kinds of traders -- successful ones and the others.

Thats the most intelligent post on this thread.The OP asked a valid question, and got the usual tripe for answers.
Here's my take on MA's:
Your ma's will be defined by your location, relevant to the local major mkt timings.
For e.g. I'm based in London, so for FX i use 21 , 63, 252 all ema.(all used by pros}
Truth be told you won't get a huge amount of difference from using 20, 50, 200.But you should understand the difference and more importantly the REASON.
Unfortunately the 21,63,252 are no help when trading indexes or commods.both those charts have different ma's.Again, do you understand the reason why??
Also, a small heads up, on reversals, when price reverses and crosses through the ma's, how do you quantify a trend change?
I have an age old trick, passed on to me, which involves % closes from the ma.Is it 1%, 1.5%, 2.0% ? Again, each class of security will differ.
Something to ponder and investigate perhaps.

I love ma's, priceless if used correctly.

Cheers.
  • #35
  • Edited Aug 12, 2012 12:58am Aug 11, 2012 10:45pm | Edited Aug 12, 2012 12:58am
Quoting jazzman
Forget about what "pros" do, if you want to make profit out of markets.

Read books about market psychology if you're so concerned about what other people do.

It is just not a good concept, separating pros from amateurs -- once you get fixed to it, you will be an amateur forever...

In my book, traders who make profit constantly (no matter how big/small it is) are all "pros" in your wording. There are only two kinds of traders -- successful ones and the others.

Thats the most intelligent post...
Can you explain more about local major market openings and how you solve for the MAs, and the relevancy there for long term "investors"?

I agree with the daily close basis, don't use % close away from MAs, but that would seem somewhat relevant to a reversion based system.

The OP asked a simple question that didn't involve much need for an opinionated response.

"What MAs do the professional investors use for long term trading in FX markets?"

This makes me think real money players, pension funds, sovereign funds.

If that's the case, I would not go with your choices, but they wouldn't be much different in edge I suppose.

To the OP, don't take anyone's word here, take a chart and experiment with it. Take the MAs on dailies and see which seems more relevant.

Wholesale market open/close is 17:00EST.

An opinion from the "professionals" I spoke to, defined as "following an occupation as a means of livelihood or for gain", MAs were not a huge part in their decisions, but worth noting.
  • #36
  • Aug 12, 2012 4:21pm Aug 12, 2012 4:21pm
I agree with the daily close basis, don't use % close away from MAs, but that would seem somewhat relevant to a reversion based system.
The % close away can sometimes be helpfull in signalling a change in sentiment, but only really becomes relevant with numerous closes above or below the ma.

The OP asked a simple question that didn't involve much need for an opinionated response.
You are quite right, my apologies. But it was a good question, and as is usual on public forums, people chime in, often with little experience, desperate to put their point across, which can be detrimental to usefull info provided to the OP.



"What MAs do the professional investors use for long term trading in FX markets?"

This makes me think real money players, pension funds, sovereign funds.
Yes, i agree.

If that's the case, I would not go with your choices, but they wouldn't be much different in edge I suppose.
No problem,as i posted, the ma's i use, simply make the most sense to me.
In truth, we are talking semantics as to whether to use a 50sma, or a 63ema.

To the OP, don't take anyone's word here, take a chart and experiment with it. Take the MAs on dailies and see which seems more relevant.
I couldn't agree more matey.If at some point you are going to risk real money, then hopefully it would be prudent to take with a pinch of salt the advice given on public forums, and actually undertake a course of experimentation and define a personal trading system.Unfortunately, most people skip this step for some reason, and get blinded by the scammers.



An opinion from the "professionals" I spoke to, defined as "following an occupation as a means of livelihood or for gain", MAs were not a huge part in their decisions, but worth noting.[/quote]
Agreed, i've never traded an ma as such, but they can provide relevant info.

All the best.
  • #37
  • Aug 12, 2012 9:32pm Aug 12, 2012 9:32pm
Inserted Video



but i personally don't use any single indicator
what i use just candlestick

cheer
  • #38
  • Edited 2:24pm Aug 13, 2012 10:48am | Edited 2:24pm
Hi Traders,

back from weekend to this thread again.

Very interesting posts and comments here I see.

So let`s summarice some things or facts together now:


1. No Standard Setup

There`s no standard setup of MA`s which all or most investors use for long term trading in FX markets.
Every individual trader has his own personal kinds and settings of MA`s in the charts, based on different individual factors and trading methods.

2. Major Moving Averages

There are 3 major MA`s that will be often but not always used by successful traders or investors in FX markets: The 50, the 100 and the 200 MA`s.
Typically they will be used as simple moving averages (SMA`s).

3. How To Use MA`s

It is important for the trader to understand how to use moving averages.
In most cases they will be used as guidelines for trend direction, for the stop loss and for take profits.

4. Entry Points

Moving Averages should not be used as entry points on crossovers.
Tested in millions variations, all failed.
MA`s could maybe used as entry points, but only in confirmation with other important factors like price action, closing prices, support and resistance, key levels, psychological price levels (round numbers), fibonnacci levels, pivot points, trendlines etc.

5. Interacting

It is important to understand that the price does not interact with MA`s.
MA`s are the results of prices.

6. Markets Psychology

It´s important for a trader to understand markets psychology.
Not only to focus blindly on moving averages.

7. Successful And Unsuccessful Traders
As a sign of respect to each inividual trader it is a better way to talk about successful and unsuccessful traders.
Not about professionals and amateurs.


So that`s all for now.
I put the things together how I did understand them.
If something might be wrong or if I`ve forgotten some important things,
please try to correct me.

We certainly can go on in this thread and talk about different other MA`s and settings which successful traders (investors) use in long term trading in FX markets.

Thank you all for your statements and comments here.

Best Regards and good trades.
It ain`t no big thing, but it`s growing.
  • #39
  • Aug 13, 2012 11:26am Aug 13, 2012 11:26am
All moving averages are lagging indicators, they show you what happened in the market and not what is going to happen, remove all MA's from your chart (and Boli Bands), look at the price action on a naked chart and open your eyes real wide. You will see what is happening NOW and then go with it. What happenned in the past means absolute Ziltch (for all the good jewish boys), look at what is happening now and trade with it.
Simple.....or what??
  • #40
  • Aug 13, 2012 4:28pm Aug 13, 2012 4:28pm
Quoting johnvr
All moving averages are lagging indicators, they show you what happened in the market and not what is going to happen, remove all MA's from your chart (and Boli Bands), look at the price action on a naked chart and open your eyes real wide. You will see what is happening NOW and then go with it. What happenned in the past means absolute Ziltch (for all the good jewish boys), look at what is happening now and trade with it.
Simple.....or what??
Then why do you need a chart? The only part of a chart that is "NOW" is the current bid/ask price...everything else is in the past...the previous tick, previous S/R levels, every previous OHLC and associate indicator data, even the current bar's open price and more than likely the current bar's high/low price. All of it is from the past.

I am not one to make absolute statements, but I will say with 100% certainty, that there is not one single profitable forex trader in the world who does not use some reference to "the past" in his decision making.

There must be some reference price in the past to compare the current bid/ask price to. I think you are being a little disingenuous with this "What happenned in the past means absolute Ziltch" stuff.
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