Question:
"You use the 10 and 20 quarter moving average lines in your training videos. However, by the time they cross, the market has already moved substantially, thus risking giving up a lot of profit by waiting to sell, or risking not getting a good price by waiting to buy. Would it be more prudent to use shorter time frames for moving averages? I assume the risk is that we might buy or sell based on a blip instead of an actual trend. Also, if we do use shorter time frames for moving averages, how far apart should the time frames be for the two lines?"
Answer:
After extensive back-testing, we found that if you had to pick just one set of moving averages, the 10 & 20 combination is the best "overall" fit for most markets. That's why it's the default behind the Wealth Phase Chart you see in the Market Summary Report.
But there's no reason to pick just one set of moving averages for ALL markets.
Some markets have a history of moving faster (San Diego is a classic example) and reward shorter time frames. The way to tell is to see which combination of moving averages best predicted that specific market's prior trend changes — and then use that combination going forward.
You can test this yourself in Custom Charts PRO. Pull up the market, add the indicator you want to track, and use the Moving Avg 1 and Moving Avg 2 overlays to try different look-back periods. Turn on Wealth Phases to see how the moving-average signals line up with the market's actual up-and-down cycles.
More important than fine-tuning the moving-average time period is to look at all six or seven moving-average decision triggers, not just the "crossover." In volatile markets, using ONLY the crossover can leave a lot of money on the table — it's the easiest trigger to follow, but it's only one of six.
Where you see this today
- Wealth Phase Chart (Market Summary Report) — the proven 10 & 20 moving-average logic, pre-built, with green bands marking each historical and current Wealth Phase.
- Custom Charts PRO — where you customize the moving-average periods, add a second overlay line, and back-test which combination best fits a specific market.