Principles Of Sliding Averages Trade System.

1. Place five – eight – and 13-period SMA intra-day schedules for measurement of force of a short-term trend. At the strong movements, Sliding averages will be aligned and will indicate in the same direction. But they are separated on one on maxima and minima while the price, at last, will not go in other direction.

2. The arrangement of the price concerning 200-day Sliding average advances long-term psychology of the investor. Bulls live above 200-day Sliding average while bears live below it. Sellers absorb regenerative rallies below this “lines on sand” while buyers come to rescue above it.

3. When 50-day Sliding average crosses 200-day Sliding average in any direction, it predicts major modification in behavior of buyers and sellers. When 50-day Sliding average, is increased above 200-day Sliding average I is called “the Gold Cross”, whereas bear crossing is called as “the Deadly Cross”.

4. For the price it is more difficult to break above decreasing Sliding average, than above increased Sliding average. And on the contrary, it is more difficult to go down for the price through increased Sliding average, than through decreasing Sliding average.

5. The sliding averages established in the different time periods show speed of a trend by means of their relation with each other. It is possible to measure it by means of classical indicator MACD, or applying plural Sliding averages to your schedules and observing, as they disperse or converge through certain time.

6. Place 60-day Sliding average of volume on the green-red histogram of volume below the price schedule when certain sessions show unexpected interest. An inclination sliding average also indetifies the latent pressure of buyers or sellers.

7. Do not use long-term Sliding averages to do short-term forecasts because their information will lag behind current events. The trend can be already mature and come nearer to the end by then when Sliding average will give a purchase or sale signal.

8. Support and resistance levels are established by Sliding averages when they disperse and converge together. Look, when one Sliding average jumps aside from other Sliding average instead of immediately breaking through it, confirming, thus, support or resistance. After crossing, at last, has taken place, this level becomes support or resistance for the future price movement.

Trade system on Moving Average:

Even on the simplest indicators is possible to construct profitable system. The set example has 2 moving periods 21 and 70. After by breaking through one of moving averages the expectation mode begins. If the prices were developed, without having reached to second (more senior) moving the input is carried out at crossing (or hardly earlier) ?? (21). Stop-loss places below a recent bottom (peak). In this system there are defects – one of them – a false signal at trend end. However, incomparable advantage that it always follows a trend, contrary to desires of not skilled player to play against it.

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