Undestanding Moving Averages

[colt45]

From this web site: http://www.investopedia.com/terms/e/ema.asp

A type of moving average that is similar to a simple moving average, except that more weight is given to the latest data. Also known as "exponentially weighted moving average".

[AlexG]

also phil wrote a little about it on his blogg

[patfergie44]

I would like to know what everyone's thoughts are on using Moving Averages when determining when the arrow goes green. Phil's book talks about using a 10 day moving average but then he explains the bear trap (on his blog) on a declining stock and suggests using a 30 day moving average. I definitely understand the principal's behind all of this but what about using a 15 day or 20 day or 25 day average? I know some of us believe in the 10 day and some believe in the 30 day. I'd love to hear from those that think something in between those two days might be as good, better or worse than either the 10 day or the 30 day averages.

[AlexG]

u use a 10 day MA to buy in and a 30 MA as an indicator

[Schwaazy]

you can choose either it's just a 10 day will bounce you in and out of the stock more often and a 30 day will keep you from making so many trades.

I think you have to look at more factors than just the moving average, schotastics and MACD. You should look at volume to see if it's declining or ascending. An increase in volume will help tell you when the big boys are buying or selling. If you have a lot of volume then it's harder to get caught in a bear trap.

[patfergie44]

Thanks for the replies. I do realize we need to use the MACD and the Stochastics for the other two signals and I realize that the 10 day moves faster than the 30 day. What I'd like to know is why not use a middle-of-the-road average like 20 days? It wouldn't bounce as much as the 10 day but would also signal a buy faster than the 30 day. Does anyone have thoughts on using a 20 day average?

[ApexAZ]

How do you see the volume on MSN?

As far as a 20 day moving avg, I use MSN charts for these tools and there doesn't seem to be an option for 20 day that I can find.

[patfergie44]

I use Business Week for looking at the charts and you can put any number you want for the MA. If I'm right, you can only get the 10 and 50 on MSN's charts??? I definitely like the Business Week ones better.

[AlexG]

Originally Posted by patfergie44

Thanks for the replies. I do realize we need to use the MACD and the Stochastics for the other two signals and I realize that the 10 day moves faster than the 30 day. What I'd like to know is why not use a middle-of-the-road average like 20 days? It wouldn't bounce as much as the 10 day but would also signal a buy faster than the 30 day. Does anyone have thoughts on using a 20 day average?

most sites use 10.30,50,200 MA it has almost become like the standard, there are exceptions of course which u can use

[pam32570]

30 Day