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THE SIMPLICITY OF MOVING AVERAGES. BY: STACIE SHAPIRO. What is a moving average? A mathematical calculation that smoothes price action into more of a trend indicator Simple versus Exponential Calculation differences Choice depends on time frame – day trade, swing, investment
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THE SIMPLICITY OF MOVING AVERAGES BY: STACIE SHAPIRO
What is a moving average? • A mathematical calculation that smoothes price action into more of a trend indicator • Simple versus Exponential • Calculation differences • Choice depends on time frame – day trade, swing, investment • Picking your time frames • Again, type of position will dictate your time frames • Common simple time frames: 20, 50, 100,150,200 • Common exponential: 5,8,13,21,34, • How do we use moving averages? • To give direction • To give signals – some use a cross over method • In combination with other methods – **CONFLUENCE**
What to look for with the moving average • General direction • Where is price in relation to the moving average • Price riding moving averages up • Price extended from moving averages • Moving averages extended from each other • Which moving average seem to matter?
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