Do Moving Averages Matter?

Some say that moving averages don’t matter because they just represent the average price for a given period. If enough market participants and algos believe they matter, their actions will impact the market. It is not what you believe matter that matters. It is what the market believes. The market doesn’t consistĀ of just you. It consists of many people, institutions, and algorithms. Time and time again, the market has shown that moving averages can play a pivotal role in a trend. Moving averages are not flawless. As it is with any other tool in the market, they only work well in certain markets. They are just one way to make sense out of a noisy market. They work better in trending markets and not at all during range-bound choppy markets.