I saw this one infomercial on Wizetrade last night.
Sounded interesting, so I googled to see if it was a scam.
I came up with some interesting information.
First Wizetrade isn’t all that it’s cracked up to be. It’s just software that tracks the EMA for you and puts it into graphical green or red format.
Second, the program costs a lot of money… $3000+…
Now my question is, how do we interpret EMA information?
If I wanted to start stock trading, how would I use the EMA information?
I looked up a stock, MSFT and checked out the 50day moving average and the 200 day moving average.
Stock price now = 27.23
50d MA = 27.604
200d MA = 26.924
Does the 27.604 for the 50d mean it’ll go up to 27.604 or was at that price on average?
My opinion is that this sort of techincal analysis is worthless. Trying to figure out what a stock will be doing by analyzing its chart is a mug’s game.
There are a lot of reasons, but I think the best argument was that if you plot the digits of pi, you will find many of the patterns that technical analysts find so revealing (most notably, the “head and shoulders” pattern).
Now you can analyze Microsoft’s chart six ways to Monday, but if tomorrow Bill Gates drops dead, it throws a money wrench into the works. The best way to determine a value of a stock is to look at the fundamentals, not analyze the shape of the chart.