Tuesday, 02 Feb 2016
by Admin
in
Trading Strategy
Stock trading systems based on fast moving averages are very straightforward to follow.

Let's look into this easy system.

Time frame chart:
  • 1 hour chart.
  • 30 minute chart
  • 15 minute chart.
stock-trading-systems-based-on-fast-moving-averages.png Indicators uses:
  • 10 EMA, 25 EMA, 50 EMA.
Entry guidelines:
  • When 10 EMA goes through 25 EMA plus continues through 50 EMA, BUY/SELL in the path of 10 EMA as soon as it obviously makes it via 50 EMA. (Just wait around for the current price bar to close upon the opposite site of 50 EMA. This waiting helps to avoid wrong signals).
leave guidelines:
  • option1: leave when 10 EMA crosses 25 EMA once again.
  • option2: leave when 10 EMA returns and touches 50 EMA (again this is recommended to wait around until the present cost bar to close within the reverse side of 50 EMA).
Pros:
  • It is simple to use, and it gives very good results whenever the market is well-known, during big price break-outs and big price movements.
Cons :
  • Fast moving average trading method is a followup signal or it is usually also called a lagging signal, which means will not forecast future market directions, but rather displays present situation on the market.
  • This feature can make it vulnerable:
    • firstly, because it can change its signals any period,
    • secondly – because need to watch it all the time;
    • lastly, when market trades side by side (no trend) with extremely little fluctuation in cost it can give numerous false signals, so this is not suggested in order to utilize it during such intervals.