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Day Trading/Moving Averages

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Question
QUESTION: Hello:

If I want to compare the S&P 500 or the D.J.I.A. with a 50 day and 200 day moving average, what time frame on the chart should I use?

I thank you for your reply.

ANSWER: Hi Kenneth,

If you're trying to compare the 50 day moving average vs. the 200 day moving average, this would be done on a DAILY chart with the 200 day moving average signifying the long term trend.



---------- FOLLOW-UP ----------

QUESTION: Hello:

I'm still somewhat confused.  If I want to determine how these two indexes (S&P 500 & D.J.I.A.) are performing, use a 50-day and 200-day moving average on a daily chart, correct?

I thank you for your follow-up reply.

Answer
Sorry Kenneth...I didn't catch this follow up question earlier!

The idea beyond the 50/200 moving average crossover is to identify changes in the long term trend. YES, they would be applied to a DAILY chart.

A 50 day cross below the 200 day is called a "death cross.' The 50 day cross above the 200 day is called a "golden cross."

In theory, "institutional" traders follow these crossovers to determine the long term trend. Like any trading idea, I would suggest that you do some testing to see if the idea actually helps YOU and your trading.  

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Mark Hodge

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Questions related to technical analysis, strategies, risk, trading plans, trading psychology and money management. Experience in trading all markets and time-frames with expertise in futures (e-minis, currencies, commodities) and equity options. Unfortunately I am not allowed to offer any specific trading advice (i.e. should I go long the E-mini S&P today).

Experience

I have been involved in the industry since 1995 working for Morgan Stanley Dean Witter and American Express Financial Advisors before becoming a full time trader. As Head Education Coach with Rockwell Trading I have coached hundreds of students around the world to achieve their trading goals with simple strategies, a sound trading plan and proper money management for the leveraged markets.

Organizations
Currently serving as Rockwell Trading's Head Education Coach www.rockwelltrading.com and moderator for Rockwell's Student Trading Room where we follow opportunities in the minis, interest rates, currency and grain markets daily.

Publications
Technical Analysis of Stocks & Commodities, "Day Trading With Volatility", June 2010 SFO Magazine, "Home on the Range: Lasso Trades Without Time", August 2010 SFO Magazine, "Day Trading Indicators, Part 1", January 2011 SFO Magazine, "Day Trading Indicators, Part 2", February 2011 SFO Magazine, "Technical Strategy", April 2011 SFO Magazine, "Advanced Trading Techniques - Futures Spread Trading", October 2011 Active Trader, "A Simple Day-Trading Strategy", November 2011 Marketplace Books, How to Trade Commodities: Simple Strategies for Gold and Crude That Traders Can Use in Any Market, June 2011

Education/Credentials
Formerly licensed as a financial advisor with Series 6, 7, and 63 licenses. B.A. in Organizational Communications with a Business Minor from California State University, Sacramento.

Past/Present Clients
I have worked with institutional traders, brokers, proprietary trading firms and private traders.
One of the few distinguished World Cup Advisors www.worldcupadvisors.com

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