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I have (T+3) predicted prices for a stock. Let us assume that the predicted prices are going to be very close to the actual prices. can I alter the formula of simple moving average for 20 days like this

SMA-20 for today= ((prices on 16 previous days)+ (todays price)+ (prices of T+1 to T+3)) /20

Will this make the SMA indicator less lagging and more useful to the traders

Note- This is only for proof of concept to be used in a report. Let us not debate on the accuracy of the predictions.

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    $\begingroup$ You are creating an estimator for the T+3 stock price. You can of course derive an estimator for the T+3 moving average. Whether it is useful or not depends upon your decision making process being enhanced by moving average consideration. I might argue that the SMA is a diluted form of the information provided by the stock price estimator in the first place so it is likely that the most useful (if it its indeed accurate) is the stock price estimator itself, rather than the SMA $\endgroup$ – Attack68 Mar 28 at 5:51
  • $\begingroup$ Thank you for your comment. Now in the scenario the predictions are not that accurate but there direction is definitely accurate, would SMA be more useful $\endgroup$ – user239457 Mar 28 at 5:55
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    $\begingroup$ By 'usefulness' I imagine you mean ability to enhance profits by greater accuracy. The only way of knowing is by backtesting your theory on given data and making a statistical inference. I don't know if it will prove to be useful or not, however, I stand by the above comment that my instinct says the purest form of accurate information is probably the most useful (reliable) rather than the SMA. In fact knowing just the direction is not really compatible with an SMA anyway since an SMA relies on prices , and incorporating direction only would be a further abstraction. $\endgroup$ – Attack68 Mar 28 at 6:35

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