I know what the difference between them is and how each is calculated, so I really wanted to get other thoughts and opinions on which to use, why and when…
On my personal usage, I currently use SMAs within one of my strategies.
I do use almost only ema’s, because the older a price is for calculating an average, the less important that price is. Sma’s however might also be useful for cross signals or other form of checking a trend stability. Plus I do not say that a system can’t be profitable just related to sma’s. It’s just my individual preference and the reason for it.
I agree with Buckscoder entirely. I backtested both for my strategies (generally trend- or range-based trading), and found emas a lot more reliable for spotting the S&R (on the trend-based strats, in a ranging market I ignore them) I want to trade from. I now have emas on all my charts and don’t use an sma at all.
I third that! I started using SMA’s when starting out but moven onto EMA’s for the same reasons. ‘old price dta carries less weight’.
I can not say which one is better but I prefer to use SMA (50,100,200,300)
The reason is that usually SMA follows the trendlines, and although they lag a bit they fit nicely in my strategy plan.
also a lot of “big players” use them to identify their long term trends, so i’d rather go with them than against
Obviously we all trade differently, and I do not know your strategy, but even very experienced traders disagree on where to place a trendline, they are a highly subjective beast, so I personally would not avoid emas because they disagree with my trendline placement. Indeed, if there is a relationship between the two then I would suggest that it would be the other way around.
You are right, I just hope OP does not thing I am saying SMA are better than EMA or that they shoul be avoided… maybe is that i like SMA give confirmation to my trendlines.
I just found this text at stockcharts.com
Simple Versus Exponential
Even though there are clear differences between simple moving averages and exponential moving averages, one is not necessarily better than the other. Exponential moving averages have less lag and are therefore more sensitive to recent prices - and recent price changes. Exponential moving averages will turn before simple moving averages. Simple moving averages, on the other hand, represent a true average of prices for the entire time period. As such, simple moving averages may be better suited to identify support or resistance levels.
Moving average preference depends on objectives, analytical style and time horizon. Chartists should experiment with both types of moving averages as well as different timeframes to find the best fit.
One has to be more “reliable” than the other, and that’s just how it is. No one can know when that one will drop reliability and the other gains. If you have a successful method… use it till its exploited and goes dormant.