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Moving Averages

Correlation Coefficient + CCIPictured above is a graph of Royal Dutch Shell vs brent crude, the correlation coefficient between them, and the commodity channel index tracking the volume weighted moving average of Shell. I tested this indicator on a few energy stocks: RDS, MRO, BP and XOM. Negative correlation between brent crude and an energy stock coupled with an overbought CCI seems to give an indication of price reversal. Here we see two overbought CCI readings coupled with negative correlation, both followed by massive drops in the price of BCO and RDS. Likewise we see negative correlation coupled with upward CCI readings pointing to massive price rises in RDS. Seems to work on daily time frame as well but indicator length will need to be tweaked accordingly. Correlation coefficient going negative is an indication of pricing inefficiency and momentum potential, but does not give us an indication of price direction. The commodity channel index can give us a sense of where price momentum is pointed. Both put together give us a powerful indicator capable of foreshadowing both momentum and direction.
REducation
by Derivati_Capital
The SMA cross strategy In this educational idea I’ll cover the SMA cross strategy. I’ll will cover how it works, what my peripheral values are and how it can work for you. The Simple moving averages cross strategy is a strategy where you buy something on a buy-signal of the indicator and sell it on a target, for example if you had 5% profit. What is a moving average? A moving average is an indicator which helps you smooth out “noise” in a graph. The indicator is based on a formula you can find the formula below. You can add values to the indicator, let’s say you want a MA of 9 candles you just add a value of 9. You usually use more than one MA, I prefer using a 7 candle MA and a 25 candle MA. The thing I like on moving averages is that you can use them in any time frame. What is a buy signal? A buy signal is created when the long moving averages (in my case the 25 candle MA) gets underneath the short one (in my case the 7 candle MA). When that happens a buy signal is created. When the opposite occurs it’s a sell order. How to determine a target. Your goal is to make money, but how can you make as much money as possible with this strategy. You have to determine a goal, so an exit-position. Your exit-position is the hardest thing of this strategy, but you can use an average of what happened before. If the average of positive “breakouts” is for example 5% profit you can use 5% profit as target. How to use a SMA strategy to make you money. Not all the SMA crosses will lead to profit, most of them are even false “breakouts”. So before you buy something on a buy-signal you have to wait a few seconds and watch what the price will do, when it goes up you buy, when it does nothing of goes down you do nothing. If you want to make money using this strategy you have to set a stop-loss, I recommend to always set a stop-loss not only for this strategy. You can keep your stop-loss really close to your buy order. www.investopedia.com():max_bytes(150000):strip_icc():format(webp)/latex_b8b977c06a4bf64591506c2bd9e918c6-5c474c25c9e77c0001d3b0e9.jpg
Education
by The_Prince
1
Bitcoin - Moving Average ZoneNot financial advise. Do your own research. The ideas shared here are the personal opinions of the BitDoctor team. Trade at your risk. A slightly different perspective and not really looking at market formations but focusing on moving averages. There are a couple moving averages I want to focus on: 1. 200 Week Moving Average (Red) - ~$3175 2. 25 Day Moving Average (Green) - ~$3542 3. 50 Day Moving Average (Orange) - ~$3674 We are currently stuck between these 25 and 50 day moving averages but what I want to focus on is historical price action. We've been rejected at the 50 day moving average many times. I'm not sure I'd include Dec 24 as a front run rejection of the 50 but definitely Jan 8 and Feb 8. If you take a loser look at the October- November timeframe, you'll notice we were suppressed below the 25 day moving average for quite a while and we were controlled by the 25 / 50 / 75 day moving average. We're close to being back there depending on what happens here at the 25/50. If we are able to break $3675 cleanly, I will be looking at the next target at $3850 but you have to be watching that resistance channel as well (in yellow). All in all we are being controlled by the 200 weekly moving average and the 50 day moving average. These moving averages are converging on each other and I'm keeping my eye on the 75 / 100 day moving averages which is also creeping closer as days go by. It will be interesting to see in the upcoming 2-3 days what happens. I am surprised we've stayed in this zone as long as we have. Trade safely friends <3 -CE-
COINBASE:BTCUSDEducation
by bitdoctor
EDUCATIONAL STRATEGY 21>50>250 BUY, 21<50<250 SELLHELLO, HERE IS A BEAUTIFUL MA STRATEGY, HOW TO SET IT UP? 1. LOAD MA 21, Linear Weighted, HL/2 (Colour WHITE) 2. LOAD MA 50, Linear Weighted, HL/2 (Colour RED) 3. LOAD MA 250, Linear Weighted, HL/2 (Colour YELLOW) SIGNALS. 1. MA 21>MA50>250 WE BUY, WE CLOSE WHEN MA 21MA50 Extra, 1. MA 50> MA 250 CONFIRMED UP TREND. GOLDEN CROSS. ONLY TAKE BUY SIGNALS 2. MA 50< MA 250 CONFIRMED DOWN TREND. DEAD CROSS. ONLY TAKE SELL SIGNALS EARLY SIGNAL. 1. SELL EARLY: MA21 < MA50 ( BUT WE ARE IN UP TREND WHERE MA 50 > MA250) 2. BUY EARLY: MA21 >MA50 ( BUT WE ARE IN DOWN TREND WHERE MA 50 < MA250) WHAT TIME FRAME SHOULD I USE? H1, H4, M15,M5. What DO I DO WHEN 21MA=50MA=200Ma? DON't ENTER, WHAIT CONFIRMED TREND AND CROSS THEN ENTER. WHAT PAIR SHOULD I USE THIS? ALL CURRENCY AND STOCK. CAN I ADD ANOTHER INDICATOR? YES, ADD PARABOLIC SAR TO GIVE YOU BUY OR SELL SIGNAL WITH THIS STRATEGY. IS THE STRATEGY BEST FOR TREND OR RANGE? BEST FOR TREND, USE M5 TIME FRAME FOR RANGE. THANK YOU ALL, PLEASE LIKE IF YOU BENEFIT SO WE ADD MORE EDUCATIONAL TIPS. ACCOUNT MANAGEMENT SERVICE 0096594072143 WHATS UP.
TVC:USOILEducation
by SignalsView
Comprehensive Trading Strategy - ConsensioDisclaimer: If you are primarily interested in copying other people’s trades then this is not for you. However, if you are willing to put in the work that it takes to learn how to trade for yourself then you have found the right place! Nevertheless please be advised that you can give 10 people a profitable trading strategy and only 1-2 of them will be able to succeed long term. If you fall into the majority that tries and fails then I assume no responsibility for your losses. What you do with your $ is your business, what I do with my $ is my business. Identify Time Horizon First and most important is identifying the time frame that you want to trade. I primarily trade the daily chart using Tyler Jenks’ Consensio. It was designed to capture long term trends. If followed it will ensure that you do not miss out on a trend and it will also get you out before it fully reverses. “We want 90% of the cookie” -Tyler Jenks There will be times when we cost ourselves a small amount of opportunity but that will be peanuts in comparison to the larger trends that will be captured. Even though it was designed for higher time frames (TFs), specifically the weekly, it can still be used on smaller TFs based on your understanding and time availability. Decisions need to be made each time a candle closes, therefore you need to be available, or out of all positions, every time that happens. I trade the daily chart because I know that I will be available every day for the candle close. I also like to trade the stock market, commodities, and FOREX as well as crypto because the daily closes are staggered throughout the afternoon and it gives me time to manage my positions. If you prefer to day trade then this strategy can be used for the 1m - 1h candles. However it doesn’t seem to be too conducive to anything above 1h, if trading 24/7 markets. For example: if trading the 4h then will not have enough time for position to develop before going to bed. Regardless of what TF you select you can zoom out to determine longer term trends, however you should only use one TF for making decisions. For example: I trade the daily chart and will zoom out to the weekly when I am looking for major reversals. However, if the price is signaling entries on the weekly then that is irrelevant because I make decisions based on the daily chart. Identify Trend “The purest form of Consensio is three Moving Averages without the price” -Tyler Jenks Once you know what time frame you are going to trade then you need a reliable way to identify the trend. I have found Consensio to be the single most powerful tool for recognizing trends (as well as signaling entries, exits and reversals). It is a system that seems very simple on the surface and potentially even unoriginal. However the deeper you dig the more you will uncover. To start you need to go to the source directly: Consensio - A New Trading System Deep Dive Into Consensio The notes that I have on it span well over 100 pages and I couldn’t possibly sum that all up in this post. Nevertheless I will attempt to cover the most important parts of the puzzle. Important: Watch the videos above or else below will not make sense. I have four subcategories for trending markets that are somewhat similar to Elliott Waves. 1) Short, medium and long term trend all in alignment. For bull trend: price > Short MA > Medium MA > Long MA (Strong trend) 2) Minor Correction (Small pullback moves against overall trend) 3) Major Correction (ABC type of correction that forms lower high but finds support at major boundary levels - Long MA, horizontal or trend line) 4) Potential Reversal (Price closes below long term MA and starts turning it over) The moving averages should be dialed in to your specific time frame to help identify each subcategory above. When the asset is in a strong trend you want to see the Short Term MA act as support / resistance. A close above / below the Short Term MA indicates a minor correction. When there is a minor correction you want the Medium Term MA to act as support / resistance. A close above / below the Medium Term MA indicates a major correction taking place. When there is a major correction that doesn’t quite reverse the trend then you want the Long Term MA to act as support / resistance. A close above or below the Long Term MA indicates a potential reversal. If in a strong trend then expect price to quickly react from the Long Term MA and continue the trend. For example: in a bull market the long term MA should act as strong support / provide a strong bounce. If it doesn't and the price closes below it instead then that is an indication that the bull market is getting exhausted. When the Long Term MA starts to show signs of a reversal then I will add a Longer Term MA (default is 200) and / or I will zoom out to the weekly chart. This really helps me to understand if it is just a major correction within a market that is still trending or if a full on reversal is to be expected. Being able to distinguish major corrections from reversals is the hardest part about consistently beating the market in the long run. Once you are comfortable with that then it mainly comes down to patience, discipline and diligence in regards to acting on signals and managing risk. Entry & Exit Signals 5% when Price crosses Short Term MA (default is 4) 10% when Price crosses Medium Term MA (default is 9) 15% when Short Term MA crosses Medium Term MA 20% when Medium Term MA turns over (if it was trending down, then watch for it to turn up) 25% Price cross Long Term MA & Long Term MA flattens / turns over 25% Golden Cross with the Medium Term MA & Long Term MA If multiple happens at once then sum the %’s. For Example: P close < S & M MA then enter 15% . If I am not in position then price crossing MA’s would trigger entries. If I am in a position then it would trigger exits. In rare cases I will flip my position by exiting a short and immediately entering a long, or vice-versa. Entries and exits are done as soon as possible after the candle closes. I trade the daily chart so I will wait for the daily candle to close before making decisions and then I will try to make sure I get filled within 30 minutes (will take a market order if necessary). If you try to front run the candle close then you will make more mistakes than it is worth. It is very important to only make decisions after the candle closes. Everything else is noise and you cannot make decisions based on noise. I may pass on signals if it would enter me against a longer term trend. For Example: Price closes above Short Term and Medium Term MA’s and they cross over in a bullish manner. 30% - 50% long entry signaled. May choose to pass if Long Term MA is bearish. I can completely pass on this entry in favor of waiting for a short if the price is below the Long Term MA and the Long Term MA is in a strong bear trend. In this case I will expect Long Term MA to act as strong resistance and will wait for price to close back below shorter term MA’s to trigger a short entry. It takes time to reverse a trend. In the above example the Long Term MA is in a strong bear trend while price appears to be rallying through it after 50% long entry is signaled. I would pass on long entries and be very confident that the price isn’t going to blow right through my Long Term MA (due to the downward angle). It very well might reverse the trend, however that will take time. If the price is above a Long Term MA that is angled down then the MA will act as a magnet for the price until it flattens / turns over. Passing on the first long entries that are signaled does not mean that I will pass up on it all together, it just means that I think it is too early / risky. I would strongly prefer to wait for a golden cross with the Long Term MA flattened, or angled up, to go ahead and fully enter. In the example above I would wait for a pullback to the Long Term MA. If it supports above and gets a golden cross with the Medium Term MA then I would be much more inclined to take that entry. It is very important to understand the difference between opportunity cost vs capitalizing on a loss. As traders we need to be completely comfortable with missing out on opportunity and extremely diligent about avoiding / minimizing losses. Therefore it is okay to pass on possible entries that are less than ideal however it is not okay to pass up on exits that feel similar. Stop Losses & Risk Management I determine my position size and leverage based on the amount of risk that I would be assuming. If an entry is triggered then I will use the Parabolic SAR or the Bill Williams Fractal to determine my risk. If SAR is too tight then I will use the Fractal. I use the medium and long term MA’s to determine what is or is not too tight. Prefer stop to be above long term MA but has to be above medium MA. I am trading Consensio, and it does not allow for stop losses in this manner. Instead it demands that you hold onto a position through the candle close and that you scale out in pieces (see above 'Entries & Exits'). This is best in 99%+ of the time. However that really limits the leverage that can be used. If trading the daily chart 3X - 5X would be the absolute max. I tend to prefer 5X - 10X leverage for a number of reasons: -Minimizes exchange risk -Can minimize slippage -Still gives me plenty of flexibility to place stop above prior Fractal / SAR Below shows an example entry triggered and my thought process for where to place the stop along with a risk / leverage calculation. Once I understand the risk, then I can calculate the position size. You should always think of risk as the amount you stand to lose opposed to exposure amount. I do not care about the exposure amount. I care about how much I stand to lose... how much I am risking. I care about controlling my downside and limiting it to less than 2% of my trading capital. In the above example the risk is 7.10% and the max leverage is 14.08%. I never use the max leverage because getting liquidating comes with significantly higher fees. In this case I would use 10X or less leverage and I would make sure to set a market stop loss below the liquidation price. If you get liquidated then it will likely be a ~22% fee. If you take a market stop before the liquidation triggers then it will be a ~2% fee. I currently like to cap my risk at $500 per trade. $500 (USD I wish to risk) / 0.071 (calculated risk based on wick above Fractal) = $7,042 (exposure) $7,042 is my maximum exposure. With 10X leverage $704.20 is the most I will need for margin. Once I understand my position size, leverage and margin requirements then the position size can be easily calculated based on the Entry & Exit Signals above. Trailing Stop Losses I consider myself 100% entered when I have $500 at risk. If the price moves in my favor then I will trail the stop loss. If I trail it to the point where it is at break even, or better, then I will not consider myself fully entered anymore. Even though I still have the full original exposure, I am no longer assuming any risk and the latter is all that matters to me. Therefore I would feel comfortable adding to my exposure up until the point where I am risking another $500. In the example above we get a great entry before a strong trend starts (also happened to follow descending triangle breakdown which provided great confirmation). The price quickly moves in our favor to the point where the stop is adjusted to break even, or very close to it. With no risk I do not consider myself to be fully exposed anymore and I feel comfortable adding to my position up to an amount that would risk $500. Need to be very careful with this because adding to a profitable position after a big move can completely ruin your trade. I will use the TD’ Sequential , RSI and Average Directional Index to confirm that the trend still has room to go. I will also check horizontals and trends to make sure I’m not selling support / buying resistance. In the example above I would really like adding because all of the above are in my favor. This can be thought of as manual unbalancing which is the opposite of how most people approach allocating capital. Automatic rebalancing will sell the most profitable positions and add to the lesser profitable positions in order to keep the same allocation percentages. For example: if allocations are 50% Apple and 50% Amazon then Amazon outperforms. It will be something like 45% Apple and 55% Amazon. Rebalancing would sell Amazon and buy Apple so that it is 50:50 again. I have always thought that is completely backwards. I want to allocate my capital to the best performing assets. If I am in a position that is really moving in my favor then I am thinking about adding to it. I would never take away from a more profitable position to add to a lesser profitable one just for the sake of balancing my portfolio. Conclusion What is outlined above is enough to ensure that you do not miss out on a trend and it also ensures that you will get out before it fully reverses. Don’t take me word for it, go do some backtesting yourself. That is when the power of Consensio will really come to life. When trying out a new strategy I always recommend to start with an extremely small amount of money that is > $0 and I also recommend zooming in. I think that it is very important to have some skin in the game so that you feel the pain and pleasure of losing and winning. However I think that is should be very nominal. If you have a $10,000 trading roll then I would take $100 and trade the 3m chart. Focus on learning the intricacies and making sound decisions. Also focus on ROI and how long it takes to generate 10%, 50% or 100%+ returns opposed the dollar amount being returned. Regardless of what time frame you decide to trade I would always start with a very small TF. The reason is that the daily / weekly charts could take years to teach what the 3m and 5m charts can teach in days. The decision making process should be exactly the same regardless of the TF. There are a ton of variables and intricate situations that you can put yourself into by trading small TF’s. Thinking your way through these situations is how you internalize and gain confidence in the trading system as well as the decision making process. Facing these situations before you have significant money on the line is what I consider batting practice. “We don't rise to the level of our expectations, we fall to the level of our training.” -Archilochos After a couple weeks of trading the shorter TF’s I felt comfortable putting significant money to work on the Daily chart. However, I consider myself a fast learner and that process could take longer for others.
BITSTAMP:BTCUSDEducation
by Sawcruhteez
16
Moving averages explained for beginners (and 'experts')Moving averages are 'averages of historic price points'. They are used to filter out "noise"(price fluctuations) and simplify price movements. For example: A moving average of 3 on a daily chart means: you take the previous 3 day-prices, add them up and divide by 3. Day 1 = 10$ Day 2 = 20$ Day 3 = 15$ ------------------ total = 45$ divided by 3 = 15$ averaged So the price was 15$ on average for those 3 days Easy right ? Often two "moving averages" are used together. Traders really should, get institutionalized "moving averages". Those being MA 50 and MA 200 (MA 200 of course being the average of four consecutive MA 50's) Every now and then those two averages can cross each other. If the shorter MA (50 in this case) goes under the longer term (200 in this case) we call that a Death Cross, that signifies a sharp drop in price (which of course already happened since you are using historic prices and thus you are too late to act on it accordingly) If the opposite should happen, the longer MA goes over the shorter one, that is called a Golden Cross and is used as a buy-signal (which you should already have done and now should sell to the people seeing that delayed indicator) Moving averages also can act as "resistance" and "support" (because its own delayed historic diluted data can do that). First here is MA50 and MA200 on the daily chart. We can clearly see that the price is under the MA50 and MA200 and that MA50 is acting as "resistance", which is of course NOT GOOD But not to worry, if we change the timebase to 3 Hour (or 4Hr), we can now observe that MA50 is actually "support" Or we could even change to 1 Hour and now MA200 is support, which is really a good sign. You can see how nice it bounced up there One can without doubt recognize how important MA50 is as a resistance here, especially just before December 29, it really struggled there. So, to conclude "moving averages" are really great and useful, for a tool.
GEMINI:BTCUSDEducation
by Je_Buurman
6
HULL Moving Average StrategyThis is my strategy based off the Hull Moving Average, created by Alan Hull. www.fidelity.com The HMA is extremely fast and accurate in determining price reversals - I exploit this quality and add the ability to select a granular TimeFrame to use for the HMA calculations (ranging from 1m to 1D). The HMA can be painted on any TimeFrame. When the HMA indicates a price reversal, the strategy waits for the current candle to close before entering a trade. Target profits and losses can easily be set, as well as: Leverage, % to risk per trade, trailing stop entry point, trailing stop offset, Spread, Commission, and more! The indicator works on any currency pair (excluding metals) and as low as the 5m timeframe.
Education
by DasanC
Simple Way to Read Oversold/Overbought Without RSIThis is how u can tell if a market is oversold (or overbought) by reading price and using our little 14EMA friend After price has a large push down (or up) like you can see in the yellow circles, it retraces up to the green circles In example 1, this yellow circle was right on the close of a huge bearish 4h engulfing. Perfect example to see how it is oversold by seeing the large gap between price and the 14 cyan coloured EMA And the following day we see this happen again in example 2. price pushes fast away from the 14EMA and therefore it needs to breath and retrace a little. No body can continuously sprint, neither can markets! "After big drop, markets must chop" Whether or not you have RSI on the charts, it is good to know when a market is oversold or overbought because nobody likes entering and seeing the trade go immediately negative, only to see it later where you thought after you closed in a loss Another cool term for a temporary up trend in an overall down trend is a dead cat bounce! This is a very very short term version considering we are looking at the 15m tf here ~ The trend is your friend and so are retracements ~
Education
by beank1
The importance of the trend: Moving AveragesHello friends, With how bitcoin has been so consistent in taking a dump the last few months (ETH even better!) I feel it is important to remind everyone the importance of being able to recognize the trend. There's a lot of things to consider when determining the outlook of the market and the trend of price is a biggie. In this example, the moving averages are all bearish. How do you tell? It's whenever the average is lower when it is faster. When the 200ma > 100ma > 50ma, you have bearish posture. The reverse is true for bear markets. If you'll notice, during this bear market, we have been testing and failing the 200 average regularly. It is a key level in the markets. Just a quick reminder/lesson for you all. The trend is very important to identify in trading because when you're neutral, it gives you a little favorable bias. And a little favorable bias can make a big favorable return :) Hope you learned something. -YoungShkreli
COINBASE:BTCUSDEducation
by CantorTechnologies
Using/Delaying McGinley Dynamic seeding to chart parabolicsc.mql5.com In summary: McGinley believed moving averages are not supposed to be used as a trading signal, and instead identify the main trend. The formula is designed to go slower when price is trending up, and faster when price is trending down, to mimic how investors react to market movements. This does not work when an asset starts at a low price then rises astronomically. Unless Gann and friends are right about markets having full cycles, I don't believe bitcoin will be under $100 any time soon. Therefore x bars are ignored to give a usable McGinley Dynamic. As a trend identification tool, the McGinley Dynamic will trail far behind during forceful uptrends. The utility created here is based on the assumptions that: Less the extremely parabolic assets, an uptrend will retrace eventually to the McG, and the trader using McG understands that the moving average trails far away to keep a trader secured in position by slowing down for movement upwards The trading strategy employed is not based solely on moving averages Like all moving averages, McG will always suffer in terms of giving clear trading signals when the trend is too strong, too weak, too volatile, etc. vs a coincidental/leading indicator Length chosen should be 60% of your chosen MA to account for lag. In this case, a McG of 15 is equal to a 25 EMA (as TradingView uses EMA as the base MA for McG). Bars ignored should be before an uptrend, and only ignored up to where the MA is usable for the particular ticker. Something I have noticed is to be cautious when publishing ideas or sharing charts with indicators that weren't intended for sharing, especially for those who do not have the ability to publish invite-only scripts. While scripts are not meant to be copied straight off a chart, in rare cases there are ways to grab an indicator for self-use when the author did not intend such. As a first step preventive measure and self-incentive to keep scripts updated, it would be ideal to apply a 'expiration date' using the timenow function to published and nonpublished indicators that are accessible to the public. Although indicators are mostly derivatives of each other (except my stuff, I'm a real snowflake), there are many such cases in which seemingly 1:1 copies pop up, and there is no real way to identify who is in the right, if anyone even is. It is possible (and not uncommon) for indicators to be 'replicated' just by coincidence, so that should not be ruled out either. Example of McGinley Dynamic outperforming an EMA in the whipsaw department: Formula as described by Investopedia: MD = MD-1 + (Index – MD-1) / (N * (Index / MD-1 )^4) where MD-1 is the previous period's moving average, N is length, and index is price source. Adjustments can be made to the formula to optimize, but at what point do you scrap it and move on to other, more appealing methods? The wide berth that McG gives is not very useful over candlestick analysis for near instant reversal identification.
BNC:BLXEducation
by NeoButane
TradingView's First Intelligent Indicator!The Moving Average is the most used indicator on the planet, yet no one really knows what pair of moving average lengths works best in combination with each other. A reason for this is because no two moving averages are always going to be the best on every instrument, time-frame, and at any given point in time. This will no longer be a problem because this free to use indicator will plot only the most profitable pair of moving average on your chart when it is applied and it will update when a different combination of moving average lengths becomes more profitable . This will be the first of a series of indicators that self optimise in real-time called the "Intelligent Series (AI)". If you like this concept, you will like the indicator. Also, please like this if you wish to support my endeavours as a contributor and wish to see more intelligent indicators as it is a lot of work. Comment down below your favourite technical indicator that you want to become intelligent!
SP:SPXEducation
by GrantPeace
25