Forex world

November 28, 2022

The best way to use moving average

The best way to use the Moving Average, in a special way, like no other, but the trading effect is very different.

You can read and watch a lot on the internet about how to use moving averages. However, today you will approach this technical indicator with a very fresh use.

You can read and watch a lot on the internet about how to use moving averages, for example:

- Trading method based on the crossover of the price line with a moving average: When the price crosses the moving average from below, buy, otherwise sell.

- Based on the crossover of the price line with 2 moving averages.

- Based on the crossover of multiple moving averages.

- Based on the slope of the moving average.

- Based on the shape of the short-term moving average with the long-term moving average.

- ...

If you trade like the majority of traders in the forex market, you use moving averages like the ways above, then your trading result will be the same as most traders, which is a loss.

So, if you want to step out of the group of losing traders, you have to think differently from them, you will also use moving averages in a different way.

It's very simple, don't overcomplicate it, just use the moving average the way I'm using it, like this:

- Instead of seeing the moving average as a force that pushes the price away, think of it as a force that pulls the price in.

- The pull of the moving average will be at its maximum when the price is farthest from the moving average.

- So, you would look for market states, where the price is far from the moving average, to find a trade position that is opposite to the direction of price movement. In other words, you will eat the price retracement wave. You will trade in overbought or oversold areas where market sentiment is volatile.

- Of course, if it is a sell order, it is ideal if the main trend is downtrend. Contrast with a buy order.

- To optimize the entry point, at the target area, switch to a smaller time frame to find a price reversal pattern (eg 2 tops / 2 bottoms, head and shoulders pattern,... ), or rely on observing candlesticks and price action.

- If the price moves correctly, you can completely apply the move stop loss method, to maximize profits, according to the method shared here: move-stop-loss.html.

- You should combine the use of multi-timeframe analysis and signal observation of trading volume.

- The choice of period for the moving average technical indicator depends on each trader's experience. The same goes for methods, Simple Moving Average - SMA or Exponential Moving Average - EMA, ...

Try this new method of using moving averages, you will see significantly improved trading results, after a period of time.

Thank you for reading the article, remember to share it if you find it useful.

Best regards,


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