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Re: Automated Trading Theory Discussion
Hey Matt,
Did you try to think what is MA? Think about it for a min.
It's an average of prices... that's it!
Why would a price shift from below some average to above some average indicate a trend? Why?
There's no logic!
In the same way, you could freely draw curves on the chart and buy/sell according to crosses of that line.
The only thing MA can and is used for is to indicate the direction of price (trend).
Right, as soul-trader stated, some MAs draw more attention by large institutes (such as the daily 200 sma) and therefore you might see price action around them as they become support or resistance, but other than that - nothing!
It's just a line that smoothes out the price volatility and should be considered as such.
Astro
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