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Better Know An Indicator Moving Averages

Better Know An Indicator Moving Averages
Better Know An Indicator Moving Averages

Better Know An Indicator: Moving Averages hey guys so as usual all information on this channel is for educational purposes only and is not intended to provide financial advice all right so I user on reddit well spent time was asking me whats a good indicator for basic traders he was getting started an Elliott Wave I said that was a disaster Elliot waves I dont like Elliott Wave so I pointed him to EMAs and I showed him an example of Bitcoin and the basic premise is you use a slow and a fast in this case a 200 and 100 moving average and basically when the MMAs cross you take a trade thats your entry signal or your exit signal so for instance here wed have the slow MA over the fast MA that suggests the beginning of a downtrend so you open a short here we have some gobbling mess so sometimes when that animes are tight that suggests theres basically sideways so you have to use some discretion as far as when to enter a trade based on you know everything else but you could always just enter an exit on every cross that way youre just objective about it and thats subjective about you know where were at and the price you cant hard to misinterpret if you just can automatically objective about everything so I call this a bullish cross I dont think it actually crossed again Id have to zoom in instead of all check but the point is this crosses bullish so youre long down here at like 2:30 okay obviously this is an amazing trade to make now youd have to close you know whatever you think is right at this point but one idea to discover the exit would be the distance from the MA itself the price distance from the MA that suggests whether or not its overbought or oversold so because this is so far away from the average price tends to want to stay in equilibrium and come back to these moving averages so thats your your hint that this is really over bottle one hint among many that this is gonna come down I mean you could always close it on the next candle as well so as many ways that trade this specific instance this bear cross I dont think actually happened because we price moved up basically you didnt though the next day or within the next few hours of this triangle I actually sold some coin before this did anything because I was too afraid it was actually gonna it was actually gonna break based on this it was some of my evidence anyway lets talk about some basic moving average strategies theres four key things youll see on any website talking about trading stuff the first obvious thing is the trend moving averages are great at assessing the trend remember the trend is your friend you dont want to trade against the trend you want to find the trend as fast and easily as possible okay so Im just gonna start here if Im looking the red is the 200 so thats the slow the blue is the fast the fifty okay so Im just looking at the red the slow at the 200 I can see here basically is the beginning of an uptrend and here is the beginning of a downtrend okay again you can say downtrend uptrend so thats your basic trend decision strategy okay is it above or below the 200 thats a common strategy all that many traders use in professional trading as well the next thing you want to assess like I said in my last chart price position relative to the MA so we can see your price position relative to the MA this is the alltime high is pretty overbought its overbought not only on the slow the 50 but its super overbought based on the 200 okay so this is be careful longing here be careful keeping your long open up here this says get ready to close now this among other things not only is this hindsight now but if I would have known what I knew now back then this is a tweezer top which I sort of explained in the candle article in the last article so this would tell you do not long this close your long possibly short this okay so the next basic strategy part of it is the strength like I keep mentioning the distance above or below if the trend is like here we see its really far below the 200 its even below the 50 so that says its definite theres a definite trend but it also says be careful shorting this because again its pretty oversold it gets very oversold here and I know all this seems like hindsight but you can use the MAS with other stuff so the third part of the strategy is entry its already mention the MA across a lot of box use the MA crosses theyre not always great on a high timeframe like the daily the MA crosses are pretty powerful so you can see when the 1512 200 crossed thats a great signal for a short because you have a slow ma over the fast ma the 200 over the 50 okay and it likewise here we have a fast over the 200 which would be a long entry signal so another way to play this is with a price touch of the actual and they itself so we can see here Im looking at the 200 and Im seeing we have an established downtrend so what I can do is what my asks at the 200 so your your orders would be here or your orders could be at the slower ma of the 50 so one way you could play this is you could say wow this is really overbought lets put some asks here with a stop like it here okay and see what happens and in this case I worked out and you could have played you know this to this which would have been the previous support then youd stay out of a trade until potentially again the 50 is touched you get stopped out and if you still had asks up here you would open a short again this is hindsight but this is one way to play it another key part of MA is when a cross is about to happen and doesnt happen thats kind of a I think of it as a powerful signal as well again this is hindsight but this happened here so we have a break of both the 50 and the 200 and we can see its kind of like a bead and Frank where things get really tight and direction change is coming thats when we know so when we know its time to pay attention and make a decision based on are we entering a trade are we exiting a trade we getting stopped out things like that so the fourth strategy with mas is the stopped out or being stoploss basically if youre in a trade and the candle closes above or below an MA that suggests an exit of the trade so for instance if I went long based on this cross and I get a candle close below this fast then that would be a stop that could be one example of how to use this I didnt mention this again but if youre looking at the quickest way to get in a trend reversal you can see we break the 50 here this would be a long entry signal even though the trend is technically bearish its like a highrisk highreward entry SiC entry signal for a long so we can see since April basically we weve had zero 50 200 crosses slope is looking good price is pretty close to the 50 you can see how hug 250 basically this entire a sending triangle you can see even on these dips it keeps tapping this 50 MA so something you might be wondering as far as what do you want to do for your own chart theres many variables for mas you can use different lengths 50 200 thats probably the most common but you can do it literally anything you want just choose a fast and slow so the type of moving average theres a ton of different types of Z mas ma ma te ma Im not going to go into the math but theyre all slightly different theyre all basically just dynamic support resistance thats all mas are you can use this on any timeframe you want and you can also use more than one moving average you could use five moving averages if you want and use like those as entry signals if you get across on three of the five that would be an entry signal for example if youre newer to trading Id stick to to make fewer trades make better trades with less you know analysis paralysis so I mentioned the 5200 crosses these are actually significant theyre being given their own name so the Golden Cross would be the bullish 50 over 200 and the death cross would be the 200 over 50 you can see here these didnt quite pan out as well as these have but you can see why theyre named because when they do pan out they pan out really well so if you were short from 500 you know thats lets say you close that 200 its a 300 trade and then if you opened at 240 and closed it so 100 you know thats another 3 400 trade so if Im moving down on the timeframes lets go to the for our ambition X so like I said you can use any time frame you want and again we have a death cross or Golden Cross put I put to chart patterns on here just to give you some context with these mas its best to use mas with other stuff otherwise youre kind of like lost I think at the very least user or the whole support resistance with the AMAs so you can see we get not only a break of this a standing triangle we get a death cross potentially doomed city which held so you could have shorted this you would stop got stopped out I dont think I actually shorted it but and then we get the Golden Cross okay so among other things this tells you its time to go along now again you can say oh this is just hindsight thats fine but the point is when the cross has happened thats a great entry signal you can see were not exactly hugging the 50 but were pretty close to it that doesnt suggest its super overbought even up here its not too crazy but when it breaks this 50 thats your definite stop so say if you if youre along here you get stopped out here for sure if you hadnt already closed based on potential head and shoulders tweezer tops at cetera so currently on the for our slope is sideways basically or flat theres really nothing to trade here one thing you could do is to trade the break of the 50 usually trade that to the next EMA so theres not really much reward here this break is actionable between this MA to this ma because its so wide so if we move down to the hourly again Im mentioning this 50 where a strong uptrend were hugging the MA were not lets just were not to what were bought and again that kind of breaks down here when we that principal breaks down here because it doesnt look like were so overbought but you could say well were pretty far from that 200 I dont know it is a subjective so however however you want to do it and then when we break down here and we get super oversold not only will your oscillators tell your oversold but the distance from the 200 again tells you your oversold because its so far away so not only are you getting these W bottoms but youre getting this 200 telling you this is a good buy opportunity because this price is so far away potential reversal is likely and you could have said that here and you would and wrong and youd say well it doesnt make any sense but again youre not just using the EMA youre using the chart pattern as well so again right now MA these are tight a price close below the 200 outside of this triangle Id say the actionable as far as a short entry signal you could open the trade before it closed we can the closes you could open the trade after the cross the earlier you open it the riskier it gets and the higher the reward gets later just want to mention this MMAR which is a ribbon moving average ribbon if you graduate to understanding all the other stuff basically these are like 10 and a stacked on each other that sort of flipped when direction changes I dont have much else to say about it something again using a lot of experience to know what its trying to tell you so if youve any questions leave them below happy trading

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