Are moving averages good or bad as trading strategies? We backtest all variants of MAs.A simple trend-following system/strategy on the S&P 500 (By Meb Faber and Paul Tudor Jones).We have covered a few other trend-following strategies in separate articles: We have covered the performance of the MLM Index and why trend following works in a separate article: Does trend following work? Why does it work? If the price is below the moving average, a short position is held.Īnd it works pretty well. Lucas Management Index (the MLM Index) which tracks a basket of commodities: If the commodity’s price is above the 200-day moving average at the end of the month, a long position is held for the next month. If you want proof you can have a look at the Mt. If the close is below, the trend is down. A moving average is an extremely simple tool to determine the trend: if the close is above the 200 day moving average, the trend is up. The main idea of a moving average is to capture trends in the market. The moving averages are all about trend-following
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