Ask Colin

MOVING AVERAGE

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  1. Are 30 wk and 50wk moving averages with 5yr and 3yr charts good basic tools to use?
  2. Do you need to change the number of periods for a 200-day moving average if changing from a daily to a weekly chart?
  3. Why do your moving averages never seem to touch the price bars?
  4. How do you plot a moving average of the 52 week highs from your ASXHL data file?
  5. What is the best moving average or group of moving averages to use for a market index?
  6. What is the difference between the 260 day moving average and the 12 month moving average?
  7. What is your opinion of multiple moving averages?
  8. Is there a way in Insight Trader to draw an exponential moving average envelope on a chart?
  9. What is an exponential moving average (EMA)?
  10. Can you suggest books or videotapes to help me trade with moving averages?
  11. Can Insight Trader scan for stocks that break above a moving average?
  12. Which is better, a simple moving average or an exponential moving average?
  13. In different places, you have written to use a 260-day Exponential MA, a 260-day Simple MA, a 12-month MA and a monthly MACD. Which is correct?
  14. To use a moving average to buy troughs in a trend, should an investor use a simple or an exponential moving average?
  15. To use a moving average to buy troughs in a trend, what period should an investor use for the moving average?
  16. To use a moving average to buy troughs in a trend, should an investor use a weekly chart?
  17. How long should a moving average be if used for a stop-loss level?
  18. When teaching your methods, you do not seem to use daily and weekly exponential moving averages, but do so in Shares and Shares Weekly. Why?
  19. If I use a 21-week exponential moving average crossover for entries and exits (with time filters) I get a lot of false starts, but losses would have been greater without it. What do you think?
  20. Is the 260 day moving average you use a simple or an exponential moving average?
  21. How can you have a 260 day moving average on a monthly chart?
  22. How is an exponential moving average calculated?
  23. I am tracking the daily and weekly moving averages on a stock I bought, but they are giving different signals. How do I use them to exit the trade?
  24. Is trading crossovers of the 260-day moving average a good system?
  25. Is the 260-day exponential moving average best for a medium to long term trader?
  26. Questions on the Trendlines column in Shares magazine December 2001 (complex question)
  27. In your article in the September 2001 issue of Shares Magazine you illustrate several wonderful examples of charts that have trended strongly over long periods. In some of these, however, the trend line at a point in time would have been broken. Each of these then continued onward and upward but, would you have sold out about the time the trend line was broken and bought back again later as they resumed trending ? If not, ie you would have stayed put, how does one know that the price reversal below the trend line will not continue downward and wipe out your profits?
  28. I have read Alexander Elder's book Trading for a living with great interest. I notice that he suggests that shares should be bought around FAIR VALUE at between the 22 and 30 day SMA. I think that you are also an advocate of this method. Most Buy signals are produced by a stock breaking out of a range or continuing a trend. The problem is that most of the time this then greatly exceeds the 22 day SMA in price. Does one: 1. Ignore fair value and bid the market price or 2. Does one bid the 22 day price and hope for the best that a retracement will allow one to pick up the shares?
  29. I don't know how much you know about excel, but is it possible to create a formula that calculated exponential moving averages?
  30. I was reading the Shares magazine October 2000 and I would like to clarify the triple moving average system. You mention for the Brandrill chart that you buy when the 15-day MA crosses from below to above the 30 day. If one wants to trade weekly does the crossing of the 5-day from below to above signal a buy? What about the 5 and 30 day? Any significance?
  31. I was curious what your thoughts/experience were of lead/lag units & Simple versus Exponential moving averages.
  32. How are moving averages are calculated?
  33. Read your article Education: Becoming a Disciplined Trader on the Shares magazine web site. Interesting system, however doesn't this approach to wait until the price has retraced to the MA ignore money management i.e. the price could have hit a stop-loss prior to rebounding back to the MA? Also, this approach implies that your price is going to improve (i.e. we're predicting the future), whereas all technical traders don't try to predict the future, they use the charts to tell them how the market is acting now.
  34. I need a couple of pieces of information: (1) the significance of the 22-day EMA. (2) Why use EMA instead of SMA? I notice that this is a major tool in your analysis; I assume it is based upon monthly moving averages.
  35. Which charts would give the general trend of the overall market and individual shares for medium-term trading?
  36. How do I decide the time period to use for a moving average?
  37. Please explain how do you calculate a moving average?
  38. What is "even stacking", which Dawn Bolton-Smith talks about in the context of triple moving averages?
  39. Is there any website where you can get charts with a moving average?
  40. In determining the break in an uptrend, should I use a 5% stop, or daily/weekly moving average cross over?
  41. In your article "Disciplined Trader", you refer to lines above and below the 22-day EMA. What are they?
  42. I am trying to re-create the moving average envelope in MetaStock 7.03. Can you help?
  43. With the three moving averages, you mention those used by Dawn Bolton Smith. Which exponential averages have given you the line of best fit and therefore which do you use?