Does simple technical analysis based on moving averages work on high-frequency spot gold and silver trading? In their August 2015 paper entitled “Does Technical Analysis Beat the Market? – Evidence from High Frequency Trading in Gold and Silver”, Andrew Urquhart, Jonathan Batten, Brian Lucey, Frank McGroarty and Maurice Peat examine the profitability of 5-minute moving average technical analysis in the gold and silver spot markets. They consider simple moving average (SMA), exponential moving average (EMA) and weighted moving average (WMA) crossing rules. These rules buy (sell) when a fast moving average crosses above (below) a slow moving average. They start with four commonly used parameter settings, all using a fast moving average of one interval paired with a slow moving average of 50, 100, 150 or 200 intervals [(1-50), (1-100), (1-150) or (1-200)]. They then test all combinations of a fast moving average ranging from 1 to 49 intervals and a slow moving average ranging from 50 to 500 intervals, generating a total of 66,297 distinct rules. To compensate for data snooping bias, they specify in-sample and out-of-sample subperiods and test whether the most successful in-sample rules work out-of-sample. They also use bootstrapping as an additional robustness test. Using 5-minute spot gold and silver prices during January 2008 through mid-September 2014, they find that: Keep Reading