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I was talking with a co-worker about investing ideas, and he mentioned a method he uses all the time;

The first part is to determine a group of companies that have solid fundamentals, and are likely to grow in the long term. Then he compares the close at the end of the week to the 30-week SMA. If the stock has 2 weeks above the SMA, he buys, and then when there is 2 weeks below the SMA he sells.

I tried to get more information on the internet about it, but came across more articles about SMA crossing strategies, where the buy and sells are triggered by the crossing of two different SMA (eg. 10-day and 50-day)

Anyone having any links or suggested reading about these strategies?
 

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Those trading strategies all work well right up until the point that they don't work.

To put some common sense into it, do you really think with all the computer technology and research money in the world today, that if it worked no one but your friend would have figured it out. It's not like SMA are new or anything.

I will bet you now that your friend will have moved on to another strategy or at least have added a new one within the next year. That is about how long it should take for him to figure out that the data this indicator gives is just noise. I am glad it has worked well for him so far, but his luck will run out as it always does.

Good luck to you.
 

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SMA strategies are basic technical analysis. Look up reading on that subject for more info.

The SMA strategy is a trend following tool. The faster moving MAs cross over the slower moving when the trend is changing. The strategy will work well in a strongly trending market. However, in a sideways/rangebound market you will get whipsawed constantly buying and selling.
 

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The SMA strategy is a trend following tool. The faster moving MAs cross over the slower moving when the trend is changing. The strategy will work well in a strongly trending market. However, in a sideways/rangebound market you will get whipsawed constantly buying and selling.
Pretty much correct.

Steve, you need to understand the "limitations" of each technical analysis before you put them to use.
 
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