web analytics

It can difficult to dig into someone else’s work and research. I wrote a post a few years ago about why using the slope of a moving average, moving average crosses, or trend indicators based on multiple moving averages might be a very bad idea. (Answer: because it puts you on the wrong side of the market!) Even knowing this, our eye will often see something different on the chart, so we have to actually crunch some numbers.

Today, I did a short video blog digging into this somewhat difficult concept. I encourage you to think about the issues I raise, and be open to some ideas that might challenge some of your beliefs. I’m not saying this is the only way to think about the problem, but here’s why I don’t use trend indicators to filter my trades. (A point I didn’t make strongly enough in the video is that this is just one year, but we see similar stats across other years, with some slight differences between asset classes. See the longer post for more details.)