The Trader’s Dilemma: Dealing With Zones Of Uncertainty by Mike B. Siroky, MD
Using the statistical concepts of sample size and population, we offer a better way to filter out whipsaws in a trend-following system based on moving averages.
In a trend-following system, the moving average is the prime indicator used to determine market trend. If you are a trend-following investor, you will be faced with the inherent drawbacks presented by moving averages. These inherent drawbacks include lag and he inevitable false signal or “whipsaw” ...