Moving Averages

[JohnnyAppleCeed]

Hi!

I've read a little bit about moving averages and how by comparing two different moving averages you decipher a little bit of what's going on below the surface of the market, and when it's a good time to jump in and out.

For example, starting around 4:45 of this video here... https://www.youtube.com/watch?v=fAhSd400lag&list=WLA318858287F6F15E

However, with the volatility of the bitcoin market I'm not sure what time frames would be best to undertake this analysis. Are there any experts that have used this method and are willing to enlighten the rest of us?

For example I've found 5 day moving averages and 20 day moving averages give good results, but as a beginner I would like to hear a more official word on what might be better.

Thanks in advance!

[FoldingTime]

You will find that you can use moving averages or any other indicator (macd, stocastic, atr, rsi, ... infinity) to predict the past extremely well, however, they fail predicting the future. Period. Been there done that many, many moons ago.

Hint: Price action at support and resistance is the key. It took many years to discover this little nugget.

[FoldingTime]

This blog post might appeal to you http://bitsolo.net/2013/12/21/bitcoin-price-technical-view/

[odolvlobo]

Technical analysis is astrology for speculators. It is all about confirmation bias. Moving averages tell you about what happened in the past, but they tell you nothing about the future. They can't even tell you about the present.

[empoweoqwj]

Hi!

I've read a little bit about moving averages and how by comparing two different moving averages you decipher a little bit of what's going on below the surface of the market, and when it's a good time to jump in and out.

For example, starting around 4:45 of this video here... https://www.youtube.com/watch?v=fAhSd400lag&list=WLA318858287F6F15E

However, with the volatility of the bitcoin market I'm not sure what time frames would be best to undertake this analysis. Are there any experts that have used this method and are willing to enlighten the rest of us?

For example I've found 5 day moving averages and 20 day moving averages give good results, but as a beginner I would like to hear a more official word on what might be better.

Thanks in advance!

Bitcoin is not a good fit for moving averages at all. Certainly can't tell you when to jump in / jump out. You'll just lose your coins gradually if you use EMA with bitcoins.

[JohnnyAppleCeed]

All good to know, thanks! Thank you also for the link above, excellent reading!

Any other trading advice using quantitative measures? I really like the idea of illuminating parts of the market with math that wouldn't normally be visible...

[empoweoqwj]

Its a sentiment-based market, technicals of any kind struggle to cope.

[btcrich]

Sentiment along with fundamentals sure do play a part in price action as it does in any market.  However, over the last couple months, technicals are becoming increasingly useful in trading the majors such as BTC/USD and LTC/USD.  This is due to some larger and more experienced traders now invested in crypto currencies.

You can check my past forecasts based purely on technicals and see how they've played out here:  https://bitcointalk.org/index.php?topic=191485.msg3951933#msg3951933

They were very much spot on.

Ninety percent of my trades are based on TA, the others on fundamentals.  Seemed like the thread had no interest so I don't think I will be continuing to contribute to it further however.

[empoweoqwj]

Technical trading has always been self-fulfilling in that if enough people use the same system, then the market will start responding to the system.

[btcrich]

Technical trading has always been self-fulfilling in that if enough people use the same system, then the market will start responding to the system.

Very true.  Since Bitcoins have been redistributed from the wallets of amateur traders that trade on gut instinct to the wallets of more experienced traders that observe charts, technical analysis has become invaluable in making successful trades.

[JohnnyAppleCeed]

Interesting perspectives all around, thanks!

As an astrophysicist I'm used to dealing with graphs a lot. Being new to crypto's and day trading in general, it's been really wild studying these graphs which have the ability to make or lose one a lot of money; instead of finding a trend in metallicity of a class of pulsating stars, or the degree at which a scalar field can effect the acceleration of the universe.

It becomes really fascinating though when a little bit of math and statistics gets involved and then unseen patterns start emerging.

For now I've sticking with my buy and hold philosophy. However, I'm starting to experiment a bit with day trading, without actually using any money yet.

Before I stat diving in any other good resources for the emerging day trader of BTC?

[kireinaha]

Not true at all. Following EMA can be very profitable for long term trading. It will often catch noise, but it's also good at identifying market trends and keeping your holdings profitable. IMO, it's better to follow an objective system to identify entry/exit points in the market. As human beings, we're all prone to emotions and tend to make poor decisions when basing purely on instinct. Following EMA crossovers tend to make several unprofitable trades, but catches the big ones and have been proven to churn nice profits over the period of weeks and months in this market.

Don't be one of the perma-bulls on here who vows to HODL forever. It could work if Bitcoin rises in value indefinitely, but if the value should plummet, they're going to lose a lot of money. Following market indicators can prevent that.

[empoweoqwj]

Not true at all. Following EMA can be very profitable for long term trading. It will often catch noise, but it's also good at identifying market trends and keeping your holdings profitable. IMO, it's better to follow an objective system to identify entry/exit points in the market. As human beings, we're all prone to emotions and tend to make poor decisions when basing purely on instinct. Following EMA crossovers tend to make several unprofitable trades, but catches the big ones and have been proven to churn nice profits over the period of weeks and months in this market.

Don't be one of the perma-bulls on here who vows to HODL forever. It could work if Bitcoin rises in value indefinitely, but if the value should plummet, they're going to lose a lot of money. Following market indicators can prevent that.

Identifying past market trends ..... never forget EMA is a backward-looking technical indicator. Catch the noise and you buy/sell at the wrong time. Catching big ones? Sure. But I can do that by many other ways, including just looking at graphs.

EMA is very popular for sure, but one reason for that is its very easy to program

[seleme]

You can make fiat trading EMA but you'll probably have less and less coins with time.

[empoweoqwj]

You can make fiat trading EMA but you'll probably have less and less coins with time.

Less and less coins isn't really the object of trading bitcoins

[Bitcoin BEAR]

Just listen to the bulls around here! They'll tell you to blindly buy at any price no matter what. After all, it has only gone up since it's inception, so it will continue to go up for eternity. You can't lose!
Apparently that is all the indicator you need 
Never mind HODLing through a bear market because you aren't really losing money. You will just lose the purchasing power, which isn't what I would call a winning strategy.

What kireinaha said is a good way to look at trading MA's. Sure you will lose on some, but you will ALWAYS be on the right side during big, impulsive moves. In when it's rising and out when it's falling.

As for period lengths, the more time that the MA is averaging, the longer the period you should be using. For a longer period (4 hour, Daily, Weekly), you will trade less, and with less noise, but if the MA is too long, the price will bottom before the MA's cross down, and top before the buy signal is triggered.
Too short, and you will run out of money in sideways movements where there is a lot of noise in underlying indicators.

[seleme]

You can make fiat trading EMA but you'll probably have less and less coins with time.

Less and less coins isn't really the object of trading bitcoins

definitely it's not.

[Odalv]

Just listen to the bulls around here! They'll tell you to blindly buy at any price no matter what. After all, it has only gone up since it's inception, so it will continue to go up for eternity. You can't lose!
Apparently that is all the indicator you need 
Never mind HODLing through a bear market because you aren't really losing money. You will just lose the purchasing power, which isn't what I would call a winning strategy.

What kireinaha said is a good way to look at trading MA's. Sure you will lose on some, but you will ALWAYS be on the right side during big, impulsive moves. In when it's rising and out when it's falling.

As for period lengths, the more time that the MA is averaging, the longer the period you should be using. For a longer period (4 hour, Daily, Weekly), you will trade less, and with less noise, but if the MA is too long, the price will bottom before the MA's cross down, and top before the buy signal is triggered.
Too short, and you will run out of money in sideways movements where there is a lot of noise in underlying indicators.

If you sell at the bottom this will not increase your purchasing power.

[empoweoqwj]

Just listen to the bulls around here! They'll tell you to blindly buy at any price no matter what. After all, it has only gone up since it's inception, so it will continue to go up for eternity. You can't lose!
Apparently that is all the indicator you need 
Never mind HODLing through a bear market because you aren't really losing money. You will just lose the purchasing power, which isn't what I would call a winning strategy.

What kireinaha said is a good way to look at trading MA's. Sure you will lose on some, but you will ALWAYS be on the right side during big, impulsive moves. In when it's rising and out when it's falling.

As for period lengths, the more time that the MA is averaging, the longer the period you should be using. For a longer period (4 hour, Daily, Weekly), you will trade less, and with less noise, but if the MA is too long, the price will bottom before the MA's cross down, and top before the buy signal is triggered.
Too short, and you will run out of money in sideways movements where there is a lot of noise in underlying indicators.

If you sell at the bottom this will not increase your purchasing power.

That's kinda obvious no?

[Bitcoin BEAR]

Just listen to the bulls around here! They'll tell you to blindly buy at any price no matter what. After all, it has only gone up since it's inception, so it will continue to go up for eternity. You can't lose!
Apparently that is all the indicator you need 
Never mind HODLing through a bear market because you aren't really losing money. You will just lose the purchasing power, which isn't what I would call a winning strategy.

What kireinaha said is a good way to look at trading MA's. Sure you will lose on some, but you will ALWAYS be on the right side during big, impulsive moves. In when it's rising and out when it's falling.

As for period lengths, the more time that the MA is averaging, the longer the period you should be using. For a longer period (4 hour, Daily, Weekly), you will trade less, and with less noise, but if the MA is too long, the price will bottom before the MA's cross down, and top before the buy signal is triggered.
Too short, and you will run out of money in sideways movements where there is a lot of noise in underlying indicators.

If you sell at the bottom this will not increase your purchasing power.

That's kinda obvious no?

That's why you don't sell at the bottom! What are you thinking?
Granted, if you are that terrible at trading that you constantly lose money, then trading isn't your forte. You might as well take the easy way out and lose your money the slow painful way (in a bear market dreaming of higher prices). Hope will buy goods, right? Didn't think so...