Hello, I am a beginner trader, hence new to this community. Hope someone can clarify some doubt about simple moving average.
I am taking the step by step course in Pipsology school and I am in the MAs chapter and then the quiz popped the following question:
But I had read earlier in the lesson that was quite the contrary.
Is the simple moving average save you from spikes and fakeouts or not? I do not want to move on with that doubt in my mind. Can someone clarify for me please.
Thank you
sf
There is no indicator out there that’ll be 100% correct everytime. That being said it can definitely have spike outs - especially when the market is ranging/consolidating. It’s still a good indicator and one of my go tos.
Thank you for your input. It sure helps!
sf
Good that your doing the Pipology course it will help immensely.
No indicator can eliminate spike and fake outs.
Moving averages are calculated as a percentage from the mean. A very good example of this would be to put a Bollinger Band on your chart. The center line is a simple MA, the outer signal lines are usually a standard 2% deviation which you can adjust.
I like EMA better than SMA. Here it is true as people have noticed, universal remedy error no.
