Email of the day on moving average terminology
Comment of the Day

August 06 2014

Commentary by Eoin Treacy

Email of the day on moving average terminology

I hope you don't think I'm being picky but your readers may be a bit confused by the last item in Comment of the Day for 5 August where Eoin shows a chart of the Euro Stoxx Banks Index and refers to a 200 day MA. But what is shown is a weekly chart with a 200 period MA plotted on it. That is not the same as a 200 day ma  which can only be plotted on a daily chart (unless you are using MTF indicators). An approximation is to plot a 40 period ma on a weekly chart, being 1/5 of 200.

Eoin Treacy's view

Thank you for this email and your concern at our terminology. I designed the Chart Library so that it would calculate 200-day moving averages based on the price feed rather than the data shown on the chart. This means that even if the chart is showing a weekly candle the moving average can still be a 200-day moving average. Therefore you can rest assured that when I say 200-day MA, that is what I mean. One of the advantages of our method is that you can save a moving average to your Preset templates and apply it to any chart of any duration without having to worry about customising it. 

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