Trading with Moving Averages
The speaker educates on how to trade with moving averages. He mentions that they are great in identifying the beginning and end of a trend. Additionally, they can often provide support and resistance for the underlying security.
He moves into discussing exponential moving averages (EMA). EMA's are more sensitive to the most recent price action as it is weighted more heavily than older data. Essentially, the longer the moving average, the less weight recent price action will have on the EMA. Conversely, the shorter the EMA, the more sensitivity it will have to recent price activity.
There are a few illustrations of his teaching through real chart examples. He mentions that moving averages are very ineffective during rangebound markets, while they are very effective in trending markets.
He likes to find impulsive moves following by corrective phases. After the corrective phase, a continuation can be expected in the prevailing trend. He explains how one could use moving averages to help trading in these kinds of markets.
His favorite moving averages are the 20 and 200 day moving average.
He moves into discussing exponential moving averages (EMA). EMA's are more sensitive to the most recent price action as it is weighted more heavily than older data. Essentially, the longer the moving average, the less weight recent price action will have on the EMA. Conversely, the shorter the EMA, the more sensitivity it will have to recent price activity.
There are a few illustrations of his teaching through real chart examples. He mentions that moving averages are very ineffective during rangebound markets, while they are very effective in trending markets.
He likes to find impulsive moves following by corrective phases. After the corrective phase, a continuation can be expected in the prevailing trend. He explains how one could use moving averages to help trading in these kinds of markets.
His favorite moving averages are the 20 and 200 day moving average.
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