Best moving average to determine trend
- Top 3 Simple Moving Average Trading Strategies
- How to Use a Moving Average to Buy Stocks
- Top 5 best Moving Average Forex trading systems
Moving averages smooth past price data so traders can more objectively see the recent trend. They filter out the noise which makes it much easier to see what direction a market is heading.
Top 3 Simple Moving Average Trading Strategies
Unlike other indicators, which require you to perform additional analysis, the moving average is clean and to the point. In day trading, having the ability to make quick decisions without performing manual calculations can make the difference between leaving the day a winner or losing money.
How to Use a Moving Average to Buy Stocks
i didnt bother to read everything in detail. if you have done a smple moving average cross strategy test. thats not an accurate way to comapare them. hull moving average for example isnt based on cross overs. alan hull said you should put one on your chart and just play the slope changes. comapring simple and exponential averages are decent i guess.
Top 5 best Moving Average Forex trading systems
Continuing, FSLR stopped in its tracks at the 65-period moving average and reversed down again only to trade sideways. At this point, you know that something is wrong however, you wait until the stock closes above the moving average because you never know how things will go.
A moving average is no magic tool and it DOES NOT MATTER whether you have a 65 period, a 66 period, a 75 period, an EMA or SMA. The only important thing is that you make consistent decisions, find out when the market conditions favor your tools (so you can take more of such trades), and when your tools don’t work (so you can stay away from trading).
For me when I look at Netflix all I see is a stock trading a full six percent away from its simple moving average when it was time for me to pull the trigger. Since I use the moving average as my guidepost for stopping out of a trade this is too much risk for me to enter a new position.
The other gray area is when a stock closes below a moving average but only by a thin margin. The stock may even hover right beneath the average, only to rise from the ashes.
In my mind volume and moving averages were all I needed to keep me safe when trading. I read all the books and browsed tons of articles on the web from top "gurus" about technical analysis.
I am not ready to throw out all the technical indicators in my toolbox based on this study, but don't try to turn your indicators into the genie in a bottle.
It's important to note that I was feeling pretty good after all this analysis. I felt that I had addressed my shortcomings and displacing the averages was going to take me to the elite level.
That last section felt clear and finite, didn't it? What you will realize once you start active trading is that stocks will break a respective moving average intra-bar, only to wick and close back above the average.
The brain is a funny thing. I remember seeing a chart like this when I first started in trading and then I would buy the setup that matched the morning activity.
True to my breakout methodology, I would have waited until 66 am and since the stock was slightly under the 65-period moving average, I would have exited the position with approximately a one percent loss.
Moving averages work quite well in strong trending conditions but poorly in choppy or ranging conditions. Adjusting the time frame can remedy this problem temporarily, although at some point, these issues are likely to occur regardless of the time frame chosen for the moving average(s).
A moving average can be calculated in different ways. A five-day simple moving average (SMA) adds up the five most recent daily closing prices and divides it by five to create a new average each day. Each average is connected to the next, creating the singular flowing line.
One type of MA isn t better than another. An EMA may work better in a stock or financial market for a time, and at other times, an SMA may work better. The time frame chosen for a moving average will also play a significant role in how effective it is (regardless of type).
There’s flow, though. The volume is irrelevant in Forex trading. Any volume indicator offered by a Forex broker shows only the volume traded at that broker.
In theory, when buying a breakout, you will enter the trade above the 65-period moving average. This will give you the wiggle room you need if the stock does not break hard in your desired direction. The above chart is the classic breakout example but let me give you a few that are not so clean.
Financial trading is risky and you can lose money. JB Marwood is not a registered investment advisor and nothing on this site is to be regarded as personalised investment advice. Past performance is not indicative of future results. Data errors and mistakes do occur. Please see the full disclaimer.