I am trying to find entry points on share installments by making use of moving average crossovers. At the moment I am using a 10/21 day crossover. Any opinions on whether MA is a good way to go to find entry points on SI's will be much appreciated. Any suggestions on good books about MA's would also be great.
MAs always lag the market. They sometimes tell you too late that things have change and by the time you enter, the market is already reversing. They do work for some shares and not for other. If you want to use MAs, find the shares they work for and only trade those.
Rather look into MACD... it incorporates MA's but is more of a leading indicator than MA's. An upturn can signal an entry point, with a crossover of the 0 line a further confirmation. Also, none of this has anything to do with SI's... determine the entry point on the underlying and then choose which instrument you want to trade. OMO (Prefer Surf to be honest...)
Thanks Simon. I do make use of EMA. Unfortunately the 10/21 day still lag quite a bit. On the other hand, it does eliminate a lot of noise when the underlying starts to move sideways or if there is a false break out. I am confident with my exit strategy. It is just the entry point that is getting me.
MA's (EMA's etc) work well if you're in a trending market. Most of the time markets are not trending (I've seen a figure of 80% quoted). If you can work out whether you are in a trending or a trading market you can decide whether MA's are the best approach or whether other tools like oscillators are going to be more useful.