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Guide On Trading Indicators Continues: What Is Moving Averages (MA) ?
Guide On Trading Indicators Continues: What Is Moving Averages (MA) ?
Calculation
You can use SMA (Simple Moving Average) to find trends. Most use any
combination of moving average, which suits you. Most traders use 50 or 100 or
200-period moving average on 4H and 1D TF (Time Frame) for trend direction.
Few traders use Moving Average crossovers to enter and exit the trade and price
often bounces from MA (Moving Average) line.
As you see it’s an uptrend and knowing the bigger TF (Time Frame) trend and
entry/exits in smaller TF will have some good traders. Often traders use to catch
swings using things. Also, if you missed any trade then you can enter while the
price is bouncing/ respecting with an MA (Moving Average).
Calculation
EMA (Exponential Moving Average) is giving much more entries than SMA
(Simple Moving Average), if we the trend direction we can catch much more
swings. You can use crossover too.
Smoothed Moving Average (SMMA)
Smoothed Moving Average is just an addition of EMA (Exponential Moving
Average) and SMA (Simple Moving Average). It gives equal weightage to the
current price as the previous prices and takes all available price data into account.
Calculation
You can also use a combination of SMMA, EMA, and SMA to build a perfect
strategy. Although Moving Average is a lagging Indicator is based on the last
price, but we can use it as potential entries.
There are many more Moving Averages but not widely used, i.e., LWMA
(Linearly Weighted Moving Average), VWMA (Volume-weighted Moving
Average), HMA (Hull Moving Average), VMA (Variable Moving Average), etc.
Golden Crossover
When a short period MA (Moving Average, can be SMA or EMA) breaks above,
then a longer period Moving Average is known as Golden Crossover. Traders
usually see it as a long-term uptrend. Moving Average can be 50, 100 or 100, 200
or 50, 200.
Death Crossover
It’s just the opposite of Golden Crossover, it gives an indication of a potential
long-term downtrend. Values are the same as Golden crossover has. False
crossover may come because the indicator is lagging.
Note: Always Trade indicators wisely with proper risk management else your
trading funds will always at high risk.
What is the Bollinger Band?
Bollinger Band is a volatility band that is based on the standard deviation. The
band expands or deflate with the increases and decreases in volatility. Price is
wrapped with 3 SMA (Simple Moving Averages), usually known as Upper Band,
Lower Band, and Middle Band. Traders use their own trade style to trade with this.
Default BB (Bollinger Band) value of an indicator in 20.
Calculation
Calculation
Example
Note: Always Trade indicators signals wisely with proper risk management and
strategy else your trading funds will always at high risk.