Best Moving Averages To Day Trade & Swing Trade Forex Market (Crucial To Your Charts)


Hey guys, let me ask you a quick question. Take a look at this chart with a 200 exponential
moving average and try to find out what determined the price to reverse right in this area and
was unable to move higher? What hides there and what is so important
in that area that made the price reverse and go the other way? You could say that this is an area of resistance
from the previous swing, and you would not be wrong. But there also something else hiding around
that area. And that’s another variation of a 200 moving
average, and more specifically the 200 Hull moving average. And here it is, a perfect short opportunity,
at an area of confluence, with the previous swing and the 200 Hull moving average. I‘m sure that many of you don’t use other
types of moving averages besides the simple and exponential ones, but in this video, we’ll
discuss about the other moving averages you should start paying attention to if you want
to spot this kind of areas on your charts. So, the moving average is probably the most
well-known and heavily used indicator in technical analysis because it effectively captures the
trend in an easily identifiable manner. Moving averages are used to calculate the
average value of the price over a determined period of time and are extremely popular among
trend following traders. Here are the main moving averages used by
traders: Simple moving average – SMA
The simple moving average (SMA), the most common one, represents an average of the closing
price over a specified number of periods. The simple moving average is more stable and
signals the changes in price movements in slow fashion. For you to see the differences between the
moving averages, we’ll plot these averages on the same chart and we’ll use a 50 period
in our analysis. Exponential moving average (EMA)
Then we have the exponential moving average (EMA). EMA gives a higher weighting to recent prices. The shorter the EMA’s period, the more weight
that will be applied to the most recent price. The calculation method of an exponential moving
average is much more complicated compared to a simple moving average. The most important thing to remember is that
the exponential moving average is more sensitive to the recent price dynamics. Triple exponential moving average – TEMA
Now, things begin to get interesting. Here we have the triple exponential moving
average – TEMA. The triple exponential moving average (TEMA)
seeks to reduce the lag of a typical exponential moving average by tripling the weighting of
recent prices. TEMA responds to market movements quicker
than the SMA or EMA. Then, we have the adaptive moving average
– AMA The adaptive moving average (AMA) was created
to improve the original exponential moving average. The adaptive moving average multiplies the
weighting of an EMA by a volatility factor. Thus, AMA adapts more quickly to the market
by signaling when volatility conditions change. Its main advantage over other moving averages
is the fact that filters the noise in the trend and automatically changes its speed
considering the market volatility. Then, we have the Hull moving average – HMA
Hull moving average (HMA), was developed by Alan Hull, is a fast moving average, responsive
and with reduced lag. Hull used several weighted averages in calculating
this moving average and claimed that this formula reduces market lag and increase smoothness
at the same time. Another type of moving average is the weighted
moving average – WMA The weighted moving average (WMA) was designed
to find trends faster but without whipsaws. The weighted moving average offers more relevance
on recent price moves and reacts more quickly to price movements than the simple moving
average or exponential moving average. And finally, the Jurik moving average – JMA
Jurik moving average (JMA) is used by some institutional traders. Jurik claims that the jma is a powerful adaptive
tracker that can smooth time series data with very a small lag, no overshoots and no oscillations. Traders use different settings of moving averages
for different reasons. Some are interested in the long-term trend,
others want to trade based on the short-term trend. The length input of a moving average depends
on the objectives of the trader. Shorter moving averages are used for short-term
trading while longer-term moving averages are used by long-term investors. Taking into account the length of a moving
average followed by traders, there are 3 categories of moving averages:
First is the long-term moving averages – 200EMA, 365 EMA
The most common exponential moving average is the 200 EMA and many traders apply it on
daily charts. It is believed that many institutions like
banks, hedge funds, forex dealers are following this indicator. If we take a look at this indicator on any
currency pair, commodity, market index or even cryptocurrencies, we can immediately
see its value. Then, the medium-term moving averages – 50EMA,
100EMA Many traders prefer to use the 50-period moving
average (50EMA). This is considered a faster moving average
as fewer input periods are used. The primary effect is that this moving average
will react more to medium-term movements. 50 EMA is considered one of the most effective
trend indicators, offering also dynamic support and resistance levels on a chart. Also we have short-term moving averages – 10EMA,
20EMA Short term mas are preferred by traders that
want to trade with current market momentum. The most common short term exponential moving
averages are 10EMA and 20EMA. These EMAs react the fastest to price movements. Fibonacci moving averages – 5,8,13,21,34,55,89,144
EMAs. Some traders often take their input values
for EMAs from the Fibonacci sequence. Most common Fibonacci-based exponential moving
averages are 5EMA, 8EMA, 21EMA, 55EMA, 144EMA and so on. Traders must keep in mind that exponential
moving averages are lagging indicators as they are based on past information. 200MA will have a much greater lag compared
to a 50MA because it includes market prices for the past 200 periods. The short-term EMAs respond more quickly to
new price changes, but at the same time offer more false signals. So, a trader must find a balance when using
exponential moving averages. Choosing one of the types of moving averages
depends directly on the style and preferences of each market participant. A simple moving average responds more slowly
to new price changes, while exponential moving averages or weighted moving averages provide
a larger number of trading signals, many of which may be false. So, it all depends on your trading style and
your trading objectives. If you got any value from this, please consider
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future. Until next time

7 Replies to “Best Moving Averages To Day Trade & Swing Trade Forex Market (Crucial To Your Charts)”

  1. when you start plugging in some EMAs and SMAs you start seeing some really interesting things. I like using the daily chart to see what is going on. trends etc. then drop to the 4 hour chart to get a feel for what the market is doing more recently. and finally i will drop to the 1 hour chart to actually initiate a trade. i have an 8 EMA, a 20,50, and 200 SMA as well as a 50 and 200 EMA. each has its own value and in a lot of cases…depending on what chart you are looking at….some of the bigger ones represent key areas of resistance. odds are market bounces off and retreats. if it breaks…you wait and watch and pay attention…..see if it is really gonna go or if is just market makers baiting you into a trap.

  2. I have one strong rule and that is when it comes to a stock if its above the 200 day moving average, I'm gonna be long and if it is below it, I'm either not gonna own or I'm gonna short it, period end of story and I just let that given every single thing I do. However , I rely greatly on the signals from my IQD momentum strategy signals. I use MA for trends but the IQD momentum for signals and it has earned my huge profit and very little risks.

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