Ask Colin

I was curious what your thoughts/experience were of lead/lag units & Simple versus Exponential moving averages.

I do not have a strong view on lead/lag units in moving averages. While the idea is logically persuasive, virtually nobody uses it.

Simple versus Exponential is more interesting. I accept the argument for exponential and tend to use that method more now than I did. It gives earlier signals on the whole because it is more responsive to recent data. However, the signal is frequently in the same bar as the Simple average, so often there is no real gain.

Trading for a Living by Dr Alexander Elder has an excellent discussion of the SMA Vs EMA issue, which I generally agree with.

By the way, MAs are a minor part of what I do and I have \d\r\o\pped them from my two day seminar since writing the Research Report, because I rely on them so little.

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