The Simplest Way To Understand The 5 Most Important Factors Of Moving Average
What is moving average and which points to buy and sell the.
Many people have heard about the moving average, but how much do you really know? Yaonology is introducing the moving average and the advantages and disadvantages. The article will use the simplest way to show you where is the selling and buying point.
What is Moving Average?
Moving Average is one of the technical analysis. Simple Moving Average is the average price by the number of periods. It determines whether the stock price trend is continuation or reverse.
The most common uses for the moving average are 5, 10, 30, 60, and 120 days. People change days based on individual needs. For example, 5 days moving average means the total average of the last Thursday to this Thursday (5 trading days in total). According to this data, we can learn stock price fluctuations.
Why Use Moving Average?
Moving Average determines trend directions and explains buying points and selling points. If the close price is higher than the moving average, the trend is up then it is a buying point. If the close price is lower than the moving average, it is a downtrend then it is a selling point.
When is the appropriate time to buy it?
First, find the Yaonology page and search indicators to search for MA (Moving Average). Yaonology sets 20 and 60 days as average days. You can set the days you like from the setting icon as well.
From this chart, you will see the blue line is 20 days MA, and the orange line is 60 days MA. When 20 days MA (Blue) higher than 60 days MA (Orange) is the buying point.
When the 20 days MA (Blue) lower than 60 days MA (Orange) is the selling point.
The Advantages and Disadvantages of MA
Advantage: Moving Average provides the smoothed line and it is the simplest way to understand the trend directly from the chart.
Disadvantage: The moving average theory is typical of looking at the trend from the history data, so it is impossible to predict the market.
Moving Average & Yaonology
Because the moving average cannot predict the future market trend for the SP500 and Bitcoin, Yaonology combines algorithmic trading strategy to predict the market trend.
After understanding what is moving average, do you want to learn how Yaonology writing our own coding strategy? Please check our moving average toolkit article to check out!