Read on Twitter
Moving averages (MAs) are a LAGGING technical indicator that serves many different purposes to different trade styles.
An MA will not be able to predict future price in any way (FYI: no indicator ever can
), but it is a great aid when charts are fuzzy.
An MA will not be able to predict future price in any way (FYI: no indicator ever can
), but it is a great aid when charts are fuzzy.
There are many different types of MAs, the most common being:
1. Simple: Assigns equal weighting to all values.
2. Exponential: Assigns a higher weighting on recent data than on older data (i.e. more reactive to recent price fluctuations; ânoisyâ).
1. Simple: Assigns equal weighting to all values.
2. Exponential: Assigns a higher weighting on recent data than on older data (i.e. more reactive to recent price fluctuations; ânoisyâ).
For the purposes of this thread, we have made use of 5 MAs but you are free to use fewer. Itâs all about what works for you.
Uses:
- Assist in identifying short, medium and long-term trends more easily.
- Guidance for profit targets and SL levels (i.e. helps with trade management)
- A moving average works like a liquid support and resistance level. Itâs fluid in adjusting to price fluctuations.
- Assist in identifying short, medium and long-term trends more easily.
- Guidance for profit targets and SL levels (i.e. helps with trade management)
- A moving average works like a liquid support and resistance level. Itâs fluid in adjusting to price fluctuations.
We have found our best success in using a combination of SMAs and EMAs.
Some traders prefer to stick to only the 200 EMA for long-term trends. Stick to whatever works for you.
When S&R coincide with signs of support/ resistance at the MA, you have a great confirmation signal.
Some traders prefer to stick to only the 200 EMA for long-term trends. Stick to whatever works for you.
When S&R coincide with signs of support/ resistance at the MA, you have a great confirmation signal.
Trade Tips for Moving Averages:
1. Donât trade spaghetti (i.e. flat MAs). Wait for the MAs to fan out for the best entries.
2. MAs are still susceptible to giving false signals. Always focus on price action.
3. Combine MA analysis with RSI for additional confirmation signals.
1. Donât trade spaghetti (i.e. flat MAs). Wait for the MAs to fan out for the best entries.
2. MAs are still susceptible to giving false signals. Always focus on price action.
3. Combine MA analysis with RSI for additional confirmation signals.
Example: [GBPJPY - 4H]
MAs add valuable info to your S&R levels. Simply adding this indicator really helps you understand price action much better, and in a visual way.
![Example: [GBPJPY - 4H]MAs add valuable info to your S&R levels. Simply adding this indicator really helps you understand price action much better, and in a visual way.](https://pbs.twimg.com/media/EWeI7-WXkAElalP.jpg "Example: [GBPJPY - 4H]MAs add valuable info to your S&R levels. Simply adding this indicator really helps you understand price action much better, and in a visual way.")
![Example: [GBPJPY - 4H]MAs add valuable info to your S&R levels. Simply adding this indicator really helps you understand price action much better, and in a visual way.](https://pbs.twimg.com/media/EWeI7-WWAAEu5vt.jpg "Example: [GBPJPY - 4H]MAs add valuable info to your S&R levels. Simply adding this indicator really helps you understand price action much better, and in a visual way.")
MAs add valuable info to your S&R levels. Simply adding this indicator really helps you understand price action much better, and in a visual way.
Example (continued):
Further, the MAs serve as great guidance for TP targets.
If you donât have an entry and exit plan, MAs are an excellent way to implement entry and exit strategy.
Further, the MAs serve as great guidance for TP targets.
If you donât have an entry and exit plan, MAs are an excellent way to implement entry and exit strategy.
The point of this thread is to show how a simple tool such as the moving average can be applied in many powerful ways 
RT for awareness.
#pipsandpatience OUT!
END.
RT for awareness.
#pipsandpatience OUT!
END.
