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Originally Posted by BullMarket
Moving averages are very good indicators of trend but, they fall short in choppy market condition , They can give you a good indication of where the market is going to go once a trend is in place. After all trend in motion is likely to continue.
If you had poor performance with them it was in your application of them. Ed Seykota, used them as a cornerstone of his trading strategy. He, as you may know, realized a 250,000% return on his accounts over sixteen years.
You have to realize your dealing with human behavior and psychology , which dose repeat, and is roughly quantifiable, just ask any psychologist. It’s never 100% accurate, it’s only probably. So, dose past price action predict future price action? Probably.
-Frank
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I would agree that averages are good at identifying PAST trend, however I don't agree that they are good at identifying either PRESENT or FUTURE trend, any better than random. I have done Monte Carlo testing against random trades and found this to be the case. It doesn't sound like you have tested your opinions. It is not that hard to test this with Monte Carlo simulation - it can be done in Excel on past data. Because of how relatively easy it is to statistivally prove that averages don't perform any better than random, there is really no reason not to take the time and do the tests yourself.
http://www.moneytec.com/forums/showt...452#post146452