Invest and Trade Profitably with Jon Johnson

When you talk about moving averages, are you using the simple or exponential moving average?

August 30, 2000

Exponential moving averages place more weight upon the later moves in the time period than the earlier moves. We use exponential on our short-term moving averages (10 and 18) as we are using them as indicators for short term plays and want to see the latest trend in movement the best we can. For the longer term moving averages (50 and 200), we use simple moving averages where each day in the period is weighted the same. This tends to smooth the line out more, showing us the true longer term trend.

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