Hello forex gurus,
I have a small question regarding moving average. On using 50 and 200 EMAs I found out that they behave differently at different timeframes. Should I differentiate moving averages as I switch timeframes? Thanks
The “50” and “200” refer to the number of periods on a chart which are being averaged (approx). Therefore a 50-period on 4-hour chart covers 50x4=200 hours of price activity (approx), whereas a 50-period on a 1-hour chart only covers 50x1=50 hours of price activity (again approx). So they will naturally appear different.
Whether to adjust the MAs you use according to the TF you are looking at depends entirely on what you are using these MAs for on each chart.
For example, a 200 EMA on a 1H chart will approximate, but not entirely replicate, a 50 EMA on the 4H chart. But if you are using different TFs to provide different signals, then you may prefer different MAs on different TFs.
Perhaps we could be more specific if you could describe in more detail what you are trying to achieve across these multiple TFs?
PS: The only reason why I use the word “approx” in the above is because EMAs are calculated on a different basis to SMAs (where the oldest period is dropped off each time a new period completes). But this is a different topic.
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Thanks a lot. This is very helpful. I will write follow on questions on this in the future