Ask Colin

What is your opinion of multiple moving averages?

In general terms, I think they are an interesting technique. They do give some insights into both short and long-term trends. Quite whether all of the psychological explanations given for them based on traders and investors are useful, I am not so sure.

Actually they are capturing ideas about market behaviour that have been known and used for many years and are also captured in other indicators.

Clearly Bollinger bands are revealing similar insights. However, there is a much older technique that I feel does a better job, at least for me. This might be called Father of Multiple Moving Averages. I refer of course to the triple moving average method that has been taught in Australia by Dawn Bolton-Smith since before the proponents of multiple moving averages were out of nappies. Multiple moving averages seem to be simply another expression of the same ideas on which the triple moving average method is based. The big advantage of the triple moving average method to my mind is the more precise buy and sell signals.

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