The most common way to interpret the average price movement is to compare the dynamics with price action. When the instrument price rises above its moving average, a buy signal occurs, if the price falls below its moving average, what we have is a sell signal.
This trading system, based on a moving average, is not designed to give market access right at its lowest point, and its exit is right at the top. This allows to act according to the following trends: to buy as soon as the price reaches the bottom, and to sell as soon as the price reaches its peak
The Moving Average Technique indicator shows the average value of the average instrument for a certain period of time. When one calculates the moving average, the average instrument price for this time period is on average. As the price changes, the average movement increases, or decreases. There are four types of moving averages: Simple (also called Arithmetic), Exponential, Smoothed and Linear Weighted. Moving averages can be calculated for sequential data sets, including opening and closing prices, highs and lows, trade volumes or other indicators. This often happens when the average double movement is used.
Moving averages may also be applied to indicators. That's where the interpretation of the moving averages indicator is the same as the average interpretation of the price movement: if the indicator rises above its moving average, it means that the upward movement of the indicator tends to continue: if the indicator is below the average of its movement, this means it will likely continue to fall.
Here are the types of moving averages on the chart:
• Simple Moving Average (SMA)
• Exponential Moving Average (EMA)
• Smoothed Moving Average (SMMA)
• Linear Weighted Moving Average (LWMA)
This indicator can not stand alone and remember this indicator is not used to take any position whether it is selling or buying. Moving averages only to determine where the price will move or this indicator is often used to determine the trend. Usually professional traders use this indicator with the help of Bollinger band to know the limits of the highest price and the lowest price.
This trading system, based on a moving average, is not designed to give market access right at its lowest point, and its exit is right at the top. This allows to act according to the following trends: to buy as soon as the price reaches the bottom, and to sell as soon as the price reaches its peakThe Moving Average Technique indicator shows the average value of the average instrument for a certain period of time. When one calculates the moving average, the average instrument price for this time period is on average. As the price changes, the average movement increases, or decreases. There are four types of moving averages: Simple (also called Arithmetic), Exponential, Smoothed and Linear Weighted. Moving averages can be calculated for sequential data sets, including opening and closing prices, highs and lows, trade volumes or other indicators. This often happens when the average double movement is used.
Moving averages may also be applied to indicators. That's where the interpretation of the moving averages indicator is the same as the average interpretation of the price movement: if the indicator rises above its moving average, it means that the upward movement of the indicator tends to continue: if the indicator is below the average of its movement, this means it will likely continue to fall.
Here are the types of moving averages on the chart:
• Simple Moving Average (SMA)
• Exponential Moving Average (EMA)
• Smoothed Moving Average (SMMA)
• Linear Weighted Moving Average (LWMA)
This indicator can not stand alone and remember this indicator is not used to take any position whether it is selling or buying. Moving averages only to determine where the price will move or this indicator is often used to determine the trend. Usually professional traders use this indicator with the help of Bollinger band to know the limits of the highest price and the lowest price.
See Figure above, this is an example of an ideal Selling position position where the pink Moving Average is in a tranding down position and the Blue Moving Average is experiencing flat. And vice versa to open the ideal buy position Moving average pink color should show tranding up and Moving average blue color shows flat.
Ok now we already have a picture for the right trading and provide maximum profit. Many traders looking for a trend where prices will move? Certainly after we get and know the trend where the price will move. It is very easy to open our position we are looking for where the price will break and reverse direction. Look for a flat price situation to determine whether the price will continue to continue the trend or reverse direction. Many ways to identify this. I so remember about kang gun-style analysis that is often discussed by professional traders. According to him flat position is the ideal position to open position. There are 2 main things that must be identified that is:
1. Identify TREND
2. Flat identification (Reversal or Retrace)
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