What is 50 or 100 day moving average?

Question

Do we use that as strategy to trade (buy, hold and sell)??? What else should I look at or research?

Answer 1

There was a strategy popularized in a group called the turtles several years ago. One of their features was to watch for a price break out of a moving average number. They commonly used 50 or 200 day numbers, but your 100 day will work too.

If you notice price fluctuations over time, there seems to develop something some people call ceilings and floors. The price seems to stay within a channel. In statistics you would call that a standard deviation, as practically applied--technically, it is a bit more involved, yet it is a functional equivalent of the principle.

Now, if the price of the stock or commodity contract "breaks out" of that corridor, whatever caused that would likely have some strength or momentum to it. The turtles found that they got to get more action in watching the 50-day moving average breakouts, but there was more strength and better results in waiting for a 200-day breakout. Bear in mind, it didn't matter which direction the price broke because they would buy (go long) for increasing prices or sell-short (go short) for falling prices.

Next you apply a stop loss of some sort, usually a trailing stop of something like 5 or 10 percent depending on how volitile (how the price flops around). Just because something set a new higher or lower price than it experienced recently doesn't mean it will be a straight shot up or down.

Answer 2

It is just an average during that period( 50 days or 100 days). But how to use for buying or selling stock is not easy- there are other factors.

Answer 3

its exactly what it says ... an average of the last 50 or 100 days .. if you want to beat the market learn how to butterfly trade ... its a win win strategy

Answer 4

Like Heather said its an average over a certain time period. It smooths out the stock price, many traders use it as an indicator of future price. We use a 10 min and 20 min moving average with quite a bit of success. If you would like some more info please visit our website www.rematatrading.com or email me at [e-mail]

Answer 5

the fee of having a moving user-friendly is that it strikes. often represented in the form of a line, the shorter the timeframe the fewer records that is going to characterize. in case you prefer your line to account for effects from fifty two weeks in the past, use a fifty two wk avg. in case you purely prefer records from the final 10 days to electrify your line, use the ten-day avg...and so on.