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Originally Posted by philsfg
Hey All, speaking of crossovers, I have recently came over from the stock/option side of the trading world. Over there, for the most part, I've been told to use the simple moving averages instead of the exponential. Over here in Forex world, the later seems to be the pick. Any reason why?
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EMA's tend to have bigger spikes because they put alot of weight on the most recent periods. This makes them react quicker. While this makes for catching trends quicker, it can also be prone to fakeouts.
It's really just a matter of personal style. If you like to use tools that put more weight on more recent data than use the EMA. However, if you like looking at the overall picture then an SMA is probably your best bet.
Happy trading!