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Online Share Trading

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Simple moving average

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Prentice
Occasional Contributor
Do any of you guys know which simple moving averages to use? I note that the charts are automatically on 12 and 26 I think. Is this a good one to use?
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3 REPLIES 3
Theater_Cat
Super Contributor
200, 50, 21, 4&9, 9&18, 5&21 et al. There are others.
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Not applicable
Theatre Cat, what is the logic behind the MA pairs? What I mean is why those specific numbers? I would expect the pair you choose to correspond to the volatility of the share?
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Their primary use is to determine the direction of hte trend and to smooth out the noise. It is best to use 2 or 3, the number of periods is not that important (the difference between 20 or 30 days is minimal). Rule of thumb is that when the short is below the longer one, downtrend is strong. Some people use cross overs as buy or sell signals, for this you need to do your own research and conclusions. (Me, I don't use cross overs - they have too much whipsaw potential)
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