- Which Is The Best Moving Average? Test Results Reveal The
- How to Trade With The Exponential Moving Average Strategy
When it comes to the period and the length, there are usually 8 specific moving averages you should think about using:
Which Is The Best Moving Average? Test Results Reveal The
This is honestly the simplest strategy you will see time and time again around the web. Please note you will not turn a profit just watching averages cross. You will need to add additional indicators and chart patterns to the mix to get a winning combination.
How to Trade With The Exponential Moving Average Strategy
A bullish crossover occurs when the shorter moving average crosses above the longer moving average. This is also known as a golden cross. A bearish crossover occurs when the shorter moving average crosses below the longer moving average. This is known as a dead cross.
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In this post I test nine different moving averages in order to see which is the best moving average for trading. Two different strategies and markets are tested. The results may surprise you.
The simple moving average is fairly easy to calculate and so the indicator is carried by nearly all trading platforms. Nowadays, all you need to do is click a button and the moving average can be plotted onto your price chart.
i didnt bother to read everything in detail. if you have done a smple moving average cross strategy test. thats not an accurate way to comapare them. hull moving average for example isnt based on cross overs. alan hull said you should put one on your chart and just play the slope changes. comapring simple and exponential averages are decent i guess.
“The 65 day exponential moving average (EMA) is my favorite indicator to determine the major trend. I call this “red light, green light” because it is imperative in trading to remain on the correct side of a moving average to give yourself the best probability of success. When you are trading above the 65 day, you have the green light, the market is in positive mode and you should be thinking buy. Conversely, trading below the average is a red light. The market is in a negative mode and you should be thinking sell.” – Marty Schwartz
During ranges , the price fluctuates around the moving average, but the outer Bands are still very important. When price touches the outer Bands during a range, it can often foreshadow the reversal in the opposite direction when it 8767 s followed by a rejection. So, even though moving averages lose their validity during ranges, the Bollinger Bands are a great tool that still allows you to analyze price effectively.
In the chart below, I marked the Golden and Death cross entries. Basically, you would enter short when the 55 crosses the 755 and enter long when the 55 crosses above the 755 periods moving average. Although the screenshot only shows a limited amount of time, you can see that the moving average cross-overs can help your analysis and pick the right market direction.
Now that we have discussed the different moving averages we can start putting them to the test to see which moving averages are most effective at finding and trading trends.