Indicators serve an important purpose for technical traders. Some will use the bare minimal while others use several. All serve their purpose and an argument can be made over each. We’re going to go over one that I find very important and that is moving averages (MA).

Simply put, moving averages smooth out price data depending on the given period of time. The common increments used are 9, 20, 50, 180, 200. There’s no rule to what ones you use, however if other traders are acting off certain increments, those would be ones you’d want to use... right? I personally use 20/50/200 on my day charts and 20/50/180/200 on my intraday charts (every trader is different). (Multiple screens help avoid cluttered charts, the screen that I buy/sell on is fairly clean with limited indicators).

Without going too in depth, there are two types of moving averages: Simple (SMA)/Exponential (EMA). The main difference is EMA puts more emphasis on recent data points.

Now the bread and butter, how do we benefit from them? Let’s start with ones that are easy to find. Golden Crosses (50MA crosses above 200MA)/Death Crosses (50MA crosses below the 200MA). One can indicate and uptrend (GC), the other may indicate a downtrend (DC). Both are important to watch for. Examples are in the first two pictures below. Another way to play MAs is when they act as support or resistance. Have you ever heard the expression “history doesn’t repeat itself but it often rhymes”? This is a good example of that. Often times, charts/stocks will bounce several times off certain MAs/they can also get rejected by MAs several times. If you see that within a chart you can make plays off it. Again, examples are in the last two pictures at the bottom.

I know these are long but if you have the time to read through countless/meaningless comments on WB, you should have time to read through a meaningful one. We have a community on Telegram that’s growing fast (over 750 members). Traders at all experience levels learning and profiting together. For those interested in joining our community, feel free to message me on Telegram @Daily_Dose_Trading. I will add you to the groups from there. If not, that’s cool too and I hope this helps! We are starting our paper trading contest on Monday, don’t miss out! (Details are in the picture below).

(Note: You want to look for your Golden/Death Crosses on day charts. MAs acting as support/resistance can be found on any timeframe.)

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