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Resolved Question
When do you ditch and keep moving averages?
about 1 year ago
Best Answer - Chosen by Voters
Moving averages work best under trending environments. Still, you can use MAs in a variety of ways. One way to use them is as a dynamic support and resistance line. Another way would is to use it to detect a ranging environment. If the moving averages are just snaking and above each other, this would indicate the pair is ranging.
In any case, if you are using moving averages as a part of your system, you shouldn't be ditching it! That is why you have to backtest your system, to see how it works in different environments.
about 1 year ago
Answers (1)
That depends on your system. If your backtesting shows that moving averages don't give you good profitability, try tweaking the settings first. Don't ditch them right away! Those moving averages could still serve as excellent trend indicators. But maybe if you're using moving averages with another lagging indicator, it could be okay to ditch one of them because they'd give almost the same signals anyway. It might be better to pair that with a leading indicator, like the stochastics or RSI. Check out some examples of leading and lagging indicators here:
about 1 year ago
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