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Why does the value of the SMA and EMA for the current time appear to change when I change my timescale. I'm using ActiveTrader by Fidelity, but I'm hoping there's an general phenomenon so that someone here will know what's going on.

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  • $\begingroup$ Are you asking why the curve gets smoother if you increase the timescale for the moving average? $\endgroup$ – chrisaycock Nov 18 '13 at 18:45
  • $\begingroup$ I am not familiar with this tool but it seems by changing the timescale the data frequency changes, too (e.g. from daily to weekly). The values in the numerator which have been the daily close prices now could be weekly (probably Friday) close prices for the last 10 weeks. $\endgroup$ – chriscross Nov 18 '13 at 18:57
  • $\begingroup$ Not why it's smoothing, but why the actual values at a certain point (i.e. today) are different. I would expect there to be a single absolute correct value for today's 200 day SMA for instance, but that appears not to be the case. I think @chriscross may have the answer in that the timescale is changing. $\endgroup$ – Jeremy Foster Nov 18 '13 at 22:16
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The moving average in your platform is most likely based on closing prices of whatever time frame you're visualizing. Daily data would using daily closing prices; weekly data would use weekly closing prices; 5 minute data would use 5 minute closing prices, etc. Therefore, as you change time frame the data used to calculate the moving average changes.

Your platform may allow you to parameterize the moving average allowing you to tell it which time frame to base the calculation on. This way, when you're looking at a 5 minute chart you can still see the 50 day moving average, etc.

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  • $\begingroup$ Thank you. I believe this is the correct answer. I don't think my platform has the option you're talking about. I wonder if there's another indicator that may not be so susceptible to the context as the SMA/EMA are. $\endgroup$ – Jeremy Foster Nov 18 '13 at 22:17
  • $\begingroup$ It's not really a limitation of the moving average as much as it is a limitation of the platform. $\endgroup$ – Louis Marascio Nov 18 '13 at 22:22
  • $\begingroup$ if you want the absolute correct answer as to which is most accurate, use the tick data to calculate the moving averages. $\endgroup$ – htrahdis Nov 20 '13 at 13:52

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