MA5-10 Moving Average
Moving Average is the most easy and popular trading strategy to the technical traders. It can be used to confirm trend, identify resistance or support levels, and help developing new trading systems.
As of today, we track and calculate the stock performance of a short-term 5-day to long-term 10-day Simple Moving Average strategy, which is called MA5-10 strategy in our system.
How to calculate 5-Day SMA and 10-Day SMA?
The 5-Day SMA is the average price of a 5 days' close prices.
The 10-Day SMA is the average price of a 10 days' close prices.
How do we trade with the MA5-10 strategy?
The MA5-10 is a trading strategy utilizing the Simple Moving Average (SMA) indicator. A short-term moving average is defined as a 5-day SMA. A long-term simple moving average is defined as a 10-day SMA. The system generates a BUY signal when the short-term 5-day SMA line moves above the long-term 10-day SMA line. And, it generates a SELL signal when the short-team 5-day SMA line goes under the long-term 10-day SMA line.
If there is a BUY/SELL signal generated today, a Market Buy/SELL Order will be created and it will be executed on tomorrow's open price.
Below is an example of a SELL signal generated by the system because the 5-Day SMA 41.31 is moving below 10-Day SMA 41.42 on 11/28/2000. And the stock will be sold at 40.02 on 11/29/2000 at it's opening price the next trading day.
Here is an example of a BUY signal generated by the system. As you can see the 5-Day SMA 42.45 is rising above the 10-Day SMA 41.88 on 12/05/2000. And the stock will be bought at 47.88 on 12/06/00 at it's opening price the next trading day.
How does it work with individual stocks?
You may see some of the stock with a profit over 100% in a 5-year period of trading by following MA5-10 strategy. But, unfortunately, it also proves that you may lose tons of money by just simply following the trading signals it generated by the system. Personally, I don't believe there is "the one" strategy we can use to make a profit on every stocks on the market.
Why not using 50-200 days to trade?
That is because you can easily get the picture on how it does from Yahoo.
I.e. http://finance.yahoo.com/q/ta?s=WFC&t=5y&l=on&z=l&q=c&p=m50,m200&a=&c=
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