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Hi traders! I'm Karlon from HK, just started to explore US stock markets. My style is swing trading but want to try day trade in US market. when I watched videos of SMB capital and day traders on youtube. I just realized many of them using 9-day SMA.
I can only see the reason beeig a compromise between too many or too few signals. I have seen an intraday strategy where the trader would fade an impulsive move that ends in a climatic state and take partial profit at the 9 EMA. A fibonacci trader would take partial profit at the 38.2% of the same move about the same place where the 9 EMA would be.
For swing trading, we often see a combination of SMA like the 50, 89 and 200 EMA.
I would not assume that a 9 SMA is actually that widely used.
Probably most traders would not use such a short-term MA, at least not as a major part of their decision-making, because it is so short term. It is nice to get into a trend quickly, but giving much weight to a such a short term tool probably will get you into a lot of whipsaws -- in-and-out trades with small consecutive losses.
So, one simple answer to the question of the reasons behind using a 9 SMA would be simply not to.
Now, of course, you will certainly find traders using practically anything, and no doubt some will be profitable. I just want to caution you about making assumptions about what successful traders use. In fact, quite a few never use any moving average; quite a few use many different ones. There is a huge array of different profitable methods out there, as well as many unprofitable ones.
If you read a lot of the posts here on futures io, especially in trading journals, it may help you get your own perspective on how to trade.
Good luck. It may not be as simple as watching a few YouTube videos, though.
Bob.
When one door closes, another opens.
-- Cervantes, Don Quixote
In my opinion, swing traders are trying to avoid "peaks" to buy or sell. for example, 9 day candles means to settles your positions before the 2nd friday arrive - assuming he/ she bought on Monday and kept position for 9 days then the decision will be made on 2nd Thursday before "the usual great sell off " Friday.
I prefer to go for Fibonacci numbers and I think 8 (not 9), 13 (not 14) ...etc is most suitable for stox swinging .
Give it a try and best wishes.
To each his own, I think. For me a 9 day SMA is a little too short term when it comes to confirmation. But, I'm sure you will figure out what best suits your trading style. Keep it simple.
I just tells you the average price for the last 9 days. It has no predictive value it just manipulates the data to make it visually pleasing.
I suppose the relation of where price is now to the ma might give you a hint about the price momentum and if you use it as an entry or exit you might not get hurt to bad when the trade moves against you.
"The days when I keep my gratitude higher than my expectations, I have really good days" RW Hubbard
Some prefer exponential MA over SMA for short term trading. It is a bit more responsive to price movement compared to SMA. Some find that advantageous.
Yup, I agree with your analysis. I've studied SMB and their bread and butter is to intra-day trade stocks with fresh momentum due to a fundamental catalyst such as earnings or breaking news. Consequently, their strategy relies heavily on gauging momentum and relative momentum with a short term MA is a simple and effective way of judging it.
