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Saturday, 03/24/2018 12:49:59 PM

Saturday, March 24, 2018 12:49:59 PM

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The oldest statistical tool to determine the future is compiling a moving average of some sort over different lengthens of time. This was first used in the 16th century determining the water usage in London, noting peaks and falls as the seasons progressed.

The oldest is still the best. Moving averages were used by the greatest trader the world has ever known Jesse Livermore to determine entry and exit pivot points. Jesse famously said: "It's more important to buy/sell at the right time, than the right price." If you time properly, over time, price will be your friend.

The conundrum using moving averages is if they are too long, the up down price signals cancel out or can lock one into a position that can't be reversed. If too short then violent whipsaws can eat up capital with a net no change for the market. It's best then to use a short moving average and a longer one double the length of the short.

This gives two buy and two sell signals moving 50% of the allocated capital at one time vs. 100%.

I personally like using a one week / two week short average and a two week / one month longer average. I also favor using an exponential moving average vs. a simple moving average.

Timing can used used on any number of assets from one to infinity, it's best to makes sure different assets are timed rather than similar assets...TBF:TLT is a better pair than AAPL:FB.

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