Moving averages

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08-03-2012, 02:31 PM
Fred114

Moving averages

Just trying to understand these things. Would someone mind reviewing and correcting my understanding? In summary 1. if the share price is above the MA the market is bullish 2. if the share price is below the MA the market is bearish, ie. not really supporting this stock. When to buy based on MA? When MA30 crosses above MA120 When to sell based on MA? Converse. So in this example attached for pfi, it looks like it might be getting near time to buy.......
08-03-2012, 04:36 PM
Jay

Have a look here fred http://www.swing-trade-stocks.com/moving-averages.html
08-03-2012, 04:59 PM
Halebop

Nice question Fred!

I'm not a big fan of moving average but would be interested if someone has some empirical stats on their predictive powers? Suspect they would also be influenced by the broader trend (Trending vs Ranging)
08-03-2012, 05:16 PM
darksentinel

Just an extra word of advice, when using moving averages make sure that your stock is trending, not ranging. If your stock is not trending (i.e. it is oscillating within a rough range) then moving averages won't be very useful and trading based on them will just cost you a fortune in brokerage.

Halebop:
I did some very naive backtesting and here are some results:
NZX50 30/4/04 to 06/03/21:
Buy and hold over this time: 29.3% increase.
Buy at lowest point and sell at highest: 79.2% increase.
Buy whenever price goes above 31 SMA and sell when price goes below: 72.9% increase - brokerage on 62 trades = 48.1% on brokerage of 0.4%.
Buy/Sell whenever 7 EMA crosses 82 EMA: 60.8% increase - brokerage on 13 trades = 55.6% on brokerage of 0.4%.

Better results when using a trend-identifier.

Results are indicative only, I'm not suggesting to use them or anything, just pointing out that MAs could potentially be used profitably.
08-03-2012, 06:08 PM
Halebop

Quote:

Originally Posted by darksentinel

Halebop:
I did some very naive backtesting and here are some results:
NZX50 30/4/04 to 06/03/21:
Buy and hold over this time: 29.3% increase.
Buy at lowest point and sell at highest: 79.2% increase.
Buy whenever price goes above 31 SMA and sell when price goes below: 72.9% increase - brokerage on 62 trades = 48.1% on brokerage of 0.4%.
Buy/Sell whenever 7 EMA crosses 82 EMA: 60.8% increase - brokerage on 13 trades = 55.6% on brokerage of 0.4%.

Cheers DS, not a huge sample but impressive results all the same. I'm assuming on something like a 31 SMA the average hold time would have been relatively compact for your 48%?
08-03-2012, 08:10 PM
darksentinel

Quote:

Originally Posted by Halebop

Cheers DS, not a huge sample but impressive results all the same. I'm assuming on something like a 31 SMA the average hold time would have been relatively compact for your 48%?

Yeah, as I said, indicative. It's just some data I had on hand that I'd been playing with. I've locked at a couple of stocks, and they give interesting results for using the crossing points of two different MAs.

Here's a spreadsheet of what I'd been doing using a 29 SMA/Price cross: http://dl.dropbox.com/u/44057876/NZX50.xlsx. It clearly shows the triggers and the problems (e.g. 26 trades were only held for 1 day). Average holding period was 15 days, but if you remove everything 1-day trade, then average holding period goes up 25, pre-brokerage profits go up to 97.7% and of course brokerage costs go down as well.

NB: all % gains are non-cummulative (non-compounding).

And yes, this is back-testing and data-fitting. Just making the point that MAs can be a useful (and simple) tool :)
08-03-2012, 11:58 PM
STRAT

Hi Fred.
Reasonable description here. As to timing trades with em. Certainly not, as a stand alone indicator.
I dont use em at all other than to make a chart look more complex.:D

As the other fellas pointed out. No use if a stock is ranging. The one in your PDF is.

http://www.incrediblecharts.com/indi...ng_average.php
09-03-2012, 08:32 PM
lou

Quote:

Originally Posted by Fred114

Just trying to understand these things. Would someone mind reviewing and correcting my understanding? In summary 1. if the share price is above the MA the market is bullish 2. if the share price is below the MA the market is bearish, ie. not really supporting this stock. When to buy based on MA? When MA30 crosses above MA120 When to sell based on MA? Converse. So in this example attached for pfi, it looks like it might be getting near time to buy.......

Using a moving average indicator for listed property trusts (pfi) as the price is relatively stable and the dividends high and consistent.
09-03-2012, 08:49 PM
Fred114

Quote:

Originally Posted by lou

Using a moving average indicator for listed property trusts (pfi) as the price is relatively stable and the dividends high and consistent.

I'm having trouble understanding this last quote, but I appreciate that PFI is ranging and that MA's are not useful as tool.
10-03-2012, 08:37 AM
lou

hahaha I missed out the key point.

Using a moving average indicator for listed property trusts (pfi) is not a good tactic as the price is relatively stable and the dividends high and consistent.
10-03-2012, 10:21 AM
STRAT

lol Lou. Thats the typo of all typos, eh?
10-03-2012, 10:54 AM
Halebop

Quote:

Originally Posted by lou

hahaha I missed out the key point.

Using a moving average indicator for listed property trusts (pfi) is not a good tactic as the price is relatively stable and the dividends high and consistent.

Ahhhh [Penny Drops]
11-03-2012, 10:00 PM
Snow Leopard

More than one one to use an average.

Quote:

Originally Posted by lou

Using a moving average indicator for listed property trusts (pfi) is not a good tactic as the price is relatively stable and the dividends high and consistent.

Unless you use the MA to tell you when the price is (relatively) cheap and do your buying under the average.

best wishes
Paper Tiger
11-03-2012, 10:22 PM
Snow Leopard

A little hysteresis goes a long way

Quote:

Originally Posted by darksentinel

Yeah, as I said, indicative. It's just some data I had on hand that I'd been playing with. I've locked at a couple of stocks, and they give interesting results for using the crossing points of two different MAs.

Here's a spreadsheet of what I'd been doing using a 29 SMA/Price cross: http://dl.dropbox.com/u/44057876/NZX50.xlsx. It clearly shows the triggers and the problems (e.g. 26 trades were only held for 1 day). Average holding period was 15 days, but if you remove everything 1-day trade, then average holding period goes up 25, pre-brokerage profits go up to 97.7% and of course brokerage costs go down as well.

NB: all % gains are non-cummulative (non-compounding).

And yes, this is back-testing and data-fitting. Just making the point that MAs can be a useful (and simple) tool :)

If you wish to reduce the whipsawing of having entry and exit based on a single MA then you modify you entry criteria to when the price rises a few percent above the MA and you sell when the price drops a few percent below the MA.

Still a simple system but with two independent variables to play with giving you hours of fun.

However you go about determining a useful system getting your exits conditions right and sticking to them is more important than getting your entries right.

best wishes
Paper Tiger
04-06-2022, 03:51 PM
Aaron

I have shares in AGL that have done OK in a little over 10 months.

It was a punt based on a morningstar recommendation.

A transition to green energy and an activist shareholder has me thinking this is no longer the dividend payer I was after and not very comfortable with it.

Morningstar still has a $13.30 valuation but now only an "accumulate" recommendation. (seems odd as the recommendation price is currently 51% above todays price. That sounds more like a buy to me if you believe in your valuation)

My question is I am happy to let my profits run but on a purely technical basis what would you look for in price movements to sell at the simplest level. E.g. crossing the 90day moving average or would you use a longer time period.

Indicators on the ASB securities website are volume, RSI and Stochastic fast and slow I assume a lot of the price movement has been the billionaire buying his stake in the company.

Torn as I don’t want to sell in case Morningstar is right and I have another 51% upside in capital appreciation but not comfortable with the company. I was thinking maybe TA can stop me selling out too soon.

The slow Stochastic squiggle is above 80 I guess sell if it drops below that.

Any thoughts appreciated.
09-06-2022, 04:03 PM
Aaron

Quote:

Originally Posted by Aaron

I have shares in AGL that have done OK in a little over 10 months.

It was a punt based on a morningstar recommendation.

A transition to green energy and an activist shareholder has me thinking this is no longer the dividend payer I was after and not very comfortable with it.

Morningstar still has a $13.30 valuation but now only an "accumulate" recommendation. (seems odd as the recommendation price is currently 51% above todays price. That sounds more like a buy to me if you believe in your valuation)

My question is I am happy to let my profits run but on a purely technical basis what would you look for in price movements to sell at the simplest level. E.g. crossing the 90day moving average or would you use a longer time period.

Indicators on the ASB securities website are volume, RSI and Stochastic fast and slow I assume a lot of the price movement has been the billionaire buying his stake in the company.

Torn as I don’t want to sell in case Morningstar is right and I have another 51% upside in capital appreciation but not comfortable with the company. I was thinking maybe TA can stop me selling out too soon.

The slow Stochastic squiggle is above 80 I guess sell if it drops below that.

Any thoughts appreciated.

No advice forthcoming so sold as the 80 line was hit as well as a financial hurricane coming. Interesting to see what I missed in 12 months $8.80 on the 9/6/2022.