Moving average

[fearghal]

Hi everyone

Can someone please explain the moving average feature in the charts to me a little? I’ve read the manual and did a bit of research but can’t quite get my head around it yet. How do I apply it to trading and what do the lines represent?

Any help and information would be appreciated

Thanks

[Morgans Choice]

Hi F,

from Wikipedia :-

A moving average is commonly used with time series data to smooth out short-term fluctuations and highlight longer-term trends or cycles. The threshold between short-term and long-term depends on the application, and the parameters of the moving average will be set accordingly. For example, it is often used in technical analysis of financial data, like stock prices, returns or trading volumes. It is also used in economics to examine gross domestic product, employment or other macroeconomic time series. Mathematically, a moving average is a type of convolution and so it is also similar to the low-pass filter used in signal processing. When used with non-time series data, a moving average simply acts as a generic smoothing operation without any specific connection to time, although typically some kind of ordering is implied.

It is said that at a crossing of the slow moving average and the quick moving averages can indicate a change in trend,

cheers, MC

[fearghal]

Hi MC
I had a look at Wikipedia but still feel a bit lost about the whole thing. Still wondering about how to apply it to sports trading and what all the settings mean. Thanks anyway. Also I think you mentioned something about using the moving average in one of your posts on my other thread. Could you explain a bit about what settings you use with it and how you make sense of the information?
Thanks
Fearghal

[doubleback]

The Moving Average is just an average which moves!

If you calculate the average price of oil over the last ten days,

each day you get a new price,

each day the last on the list, drops of the list,

you can plot a graph:

Last ten day prices of oil added together / 10 (ten days) = a different price each day = Moving Average.

Now, depending on what period of time that you use, can give different results or a different (MA) line,

say we were to use a common MA of 200 days,

we could say that if the current price is above the 200(MA) then the price is going up,

if the current price is below the 200(MA) then the price is going down.

If we were to use a lower Moving Average then the MA line would 'hug' the price line more closely and give different signals,

because the average would be taken over a lesser amount of time,

there would be more signals and more trades as can be seen, if in the above example we,

bought when the price line broke up through the 50 day Moving Average,

sold when the price line broke down through the 50 (MA),

this would give us more signals and shorter term term trades than if we stuck to the 200 day Moving Average.

[doubleback]

To answer your question specifically,

Moving Averages are most useful in the pre-race horse markets,

where the ebb and flow of the price fluctuates.

[BRAINSOLD]

Partners,

Could any good soul, explain how to configure in GeekToy this “Moving Average” charts for being use in Pre-live horses racing?

Thanks and keep up the good work,
Brainsold

[doubleback]

Here you go, i made a quick video to show the settings that i use, you can then play around with them to find something that suits you,

i guess the most important values are the frequencies of the Moving Averages, on AGT i use 20 MA and 50 MA frequencies,

i think it is also important to point out that i had a greyhound race open in the video with not a massive amount of liquidity as there is no horse racing on today but theses settings work for me on the horses......

Video Linky

[fearghal]

Hi Doubleback

What do you look for when using the moving average?

[doubleback]

Hi Doubleback

What do you look for when using the moving average?

I look for a break of the higher period moving average, when that has been broken i enter a trade, i keep my cursor on the ladder at the current price of the higher moving average and use that price as an entry point so in effect i 'stalk the price', if the moving average is at 3.2 and the current price is at 3.6 i will not enter until 3.15 is being traded. When the higher moving average has been broken this could signify a change in trend or could be just a short downward/upward movement so i keep an eye on the betfair graph as well to see what is happening trend wise (bigger picture) for an additional indication as to how strong the break through the moving average is:

Basic trend reading, draw a straight line connecting all the lower troughs of a price if the price is going up vice versa you would draw a straight line between all the peaks if the price is going down, i can see the trend lines in my minds eye so i don't need to draw a line but it is a good exercise to draw them on graphs to become familiar with them.

If the trend line has been broken then i know that a possible reversal is taking place which means a good few ticks are possibly up for the taking. Back to the moving average, once the higher period MA has been broken i jump straight in and the price will generally move in the desired direction, not all the time but definately more times than not and that is where the discipline comes in to get out of a trade that goes against you, however once the moving average has been confirmed as being broken then it is time to think about getting out, i am not too greedy and will take the ticks that i get out of the initial move. When the lower moving average crosses the higher moving average then this is also an indicator that the price will carry on going in the direction that you have traded, at this point i am usually getting out so essentially i am trading the price line break of the higher moving average until the lower moving average crosses the higher moving average but you could still stay in this trade and ride the trend and wait for further signals which would be the reverse eg:

Looking at the graph, and where the higher/lower/price lines are on the graph, also at the current betfair graph and the trend, the highest value would be the higher period moving average then below that would be the lower period moving average then below that the price line, the betfair graph would remain in the current trend.You could exit when either the price line reverses and breaks the lower moving average, the higher moving average, the lower moving average turns and breaks the higher moving average or the current trend line of the betfair graph gets broken.

I hope this makes sense and here is a video that i made using what i have described:

[BRAINSOLD]

YOU ARE THE BEST!

Thank you very much for your quick support & help.

Hope you have great deal in this sports trading,
Hugh,
brainsold

[Morgans Choice]

Here you go, i made a quick video to show the settings that i use, you can then play around with them to find something that suits you,



Video Linky

Hi D,

thank you for this fantastic video. I'm computer illiterate, due mostly to age but also more than a little numbness in the head. I've struggled for ages to try and get the numbers on the charts to be big enough to read, without success. Now your layout has enabled me to take the guesswork out of price movement,

cheers, MC

[Temujin]

Please excuse my laziness, but I will pose this question, which I probably have before, with the knowledge that I haven't really read through this thread, just made assumptions based on the moving average being based purely on the price traded.

So, with that in mind, hmmm although if I am not right this question is redundant anyway , but is there a way to calculate the moving average, average, or whatever it may be, in regards to liability at odds, rather than simply the price traded.
eg, the way I see it working now is:

1 dollar traded at 2.00, 1 dollar traded at 3.00, average is 2.5.
1 dollar traded at 2.00, 1000 dollars traded at 3.00, average is 2.5 in 2 bets.

What I want, is weighted average, based on the liability of the trades. I mean if only 1 dollar is traded at 2.00, but 1000 at 3.00 in 2 bets, the average really isn't 2.5 right?

This can't happen right? Unless you use an excel based system with your own settings formulated in?

[LuckyYou]

Thats why, when you have MA, you need a volume bar down. Futures traders always watch the MA + volume which is a big indicator for possible trend reversal. You don't need excel spreadsheet. In the case of our platform we can easy see it with changing of WOM. If you see like 7k on the lane and they suddenly disappear by being taken (but being take! not canceled! ) volume bar will show you big move. This is a signal to get in position. You ofc have to have in mind that all this indicators are slow and you must see all these thing on the TOY, not on the chart, because they would be shown later. And If you decide the get in the market after you saw these things on the chart it would probably be too late

[LuckyYou]

Its all good on theory. Why I can't do it when I am in there I am too slow

[shadowninja]

I look for a break of the higher period moving average, when that has been broken i enter a trade,

If the trend line has been broken then i know that a possible reversal is taking place which means a good few ticks are possibly up for the taking

Nice one. Reversion to mean, it seems by your video.