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Showing results for tags 'lag'.
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i've read an article from John Ehler. which explains mathematical nature of the moving averages. he has described that how to calculate the lag of moving averages. SMA's lag is calculated by (N-1)/2. eg : 5 SMA = (5-1)/2 = 2 bar lag. WMA's lag is calculated by (N-1)/3. eg : 7 WMA = (7-1)/3 = 2 bar lag. so both are very similar on price chart. but what if you use 10 SMA? yes it's 4.5 bar lag. (10-1)/2 = 4.5 since stock charts are time series that proceeds one by one . (except P&F and renko etc). i don't feel comfortable with moving averages that has lag of point numbers like 10 SMA. though i don't have any evidence for it. just intuitively so i've collected some moving average periods that has lag of integer numbers. therefore i don't use 20 SMA anymore. hope this helps.
