The Moving Averages Strategy
Moving averages gives you a hint as to the direction of the market, this is useful in
identifying a trend. A trend is a good entry signal. A disadvantage of moving averages is
that they tend to leg the market thus you need to use short period moving averages,
such as a 5- or 6-day moving average, to reflect the current price action.
Moving averages are the most basic and most utilized technical indicator. They are
used for smoothing the price movement. Moving averages are used as a trend line
which adapts to price changes, not just as a regular trend line.
The Moving Averages strategy gives you the following signals:
If the closing price moves above the moving average - this is a buy signal.
If the closing price dips below the moving average - this a sell signal.
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