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Did you ever use moving averages, and what are the advantages? In trading, if you are using a 500-day moving average, you can confidently long on the top and short on the bottom. Did you ever use a 100-day moving average or a 20-day moving average, and do you find them advantageous?
When you are using 20 day or 100 day averages, you will find many dead crosses or golden crosses; both are helpful. But if you want to see the high position, the 500-day allows you to see the distant future that no YouTuber can predict.
How to judge
If you are using the 500-day moving average, if the strength of the trend is above the 500-day average and has no divergence, then no doubt I should go long. If the trend is below the average and has no divergence, then do not wait and go short.
When you are using moving averages, always look at the strength of the trend and determine its divergence. The K-line movement is basically the strength, and the area enclosed by the moving average is the wave of the trend.
During analysis, if the first wave is small and the other wave is larger, it means the momentum is strong and there is no major divergence. If the first wave is large and other waves are continuously smaller, it means the divergence occurs. The best strategy here is to go short and search for other opportunities. If you are using moving averages, always make sure to follow the three rules.
- What are the turning points, and which one is big?
- Always set an automatic stop loss.
- If the first, second and third waves doesn’t change more, you will make a continuous profit.
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