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Stocks & Commodities V. 25:10 (50): Q&A by Don Bright

Stocks & Commodities V. 25:10 (50): Q&A by Don Bright

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Q&A by Don Bright

IMPROVING A TRADING SYSTEM

Don, what you think about a simple system like a moving average crossover system? Ive played with different combinations (50/200, 30/100, and so on) in different markets (NASDAQ, Standard & Poors 500, and others) with equities only. I got very good results with 30/100 in NASDAQ with money management, investing about 3% per trade. My profitable trades are somewhere between 40% and 50%. What you think about the system, and how do you think I should improve the trading system with additional indicators? Thanks. Sudhir Cheda

Moving average trading systems are one of the oldest and most basic still being used today. But looking for return on investment is one thing, actively trading is another. Since many fund managers utilize moving average and moving average convergence/divergence (MACD) techniques and generally return about the same long-term return as the overall market (actually, most underperform the S&P 500), would have to say that relying on this type of system alone would not be the best way to extract money from the market.
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