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  1. #1
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    Indicator Moving Average

    Hi everybody, welcome to the thread created by me on Moving Averages Indicator. I would like to thank you all in advance for spending time in reading this post. I am writing about the indicator which i am using day in and day out in my routine trading life. Hence, all the critics and comments are accepted, indeed it is highly helpful for me to modify my trading method if there are any changes to be made. I have made gains and losses because of moving averages as there is nothing "perfect" in the forex market and the forex trading business.

    Below is the complete detail of moving averages, its use in the trading business.

    •Description of indicator;

    Moving averages smooth the price data to form a trend following indicator. They do not predict price direction, but rather define the current direction with a lag. Moving averages lag because they are based on past prices. Despite this lag, moving averages help smooth price action and filter out the noise. The two most popular types of moving averages are the Simple Moving Average (SMA) and the Exponential Moving Average (EMA).
    These moving averages can be used to identify the direction of the trend or define potential support and resistance levels.

    Exponential moving averages have less lag and are therefore more sensitive to recent prices - and recent price changes.
    Exponential moving averages will turn before simple moving averages. For this fact i am focusing more on EMA in my trading analysis.

    •Features and principles of indicator;

    The moving average indicator can be modified according to the type of trading method and trader type.
    For short term traders - moving averages from 5-20 periods are best suited.
    For medium-term traders - moving averages might extend from 20-60 periods.
    For Long-term traders - moving averages with 100 or more periods are preferred.

    I use Two moving averages for generating crossover signals and that is EMA 18, EMA 30.

    •Settings of indicator;

    The set up of the moving average indicator is very easy as they are easily available, infact they are one of the default indicators available in metatrader trading terminal. I have updated the set ups with two options, one where in there is direct click set up and in the second image there is direction from the insert tab in the meta trader trading terminal.

    Attachment 12578

    In the default meta trader trading terminal set up, on left side of the monitor there is account information tab and below the same we can find indicators tab. On clicking the list there are number of default indicators available. Move to Alphabet “M” – Where in you can find Moving averages, or sometimes it can be under Alphabet “C” – Custom Moving Averages. Click on this and then the set up box opens, under the periods tab there are options for moving average selection with two options – Simple or Exponential, select Exponential and the periods can be changed by manual set up as 18 with one color and EMA 30 with another color for better distinction.

    Attachment 12579

    •Supporting screenshots;

    I have attached the images of GBP/JPY, EUR/USD currency pairs which have given perfect sell and buy signal. I prefer to use M15 timeframe for obtaining the trading signal and there should be a clear close of the candle above the moving averages 18, 30 crossover. Its always best to rack up the pips because of which am happy with profits in the range of 30-50 pips, anything above that is certainly a feast.

    Attachment 12580 Attachment 12581



    ENTRY SIGNAL : Buy or Sell signal is generated from the crossover when 18 EMA crosses 30 EMA. The successful close of the two - three candles is always best for considering to enter into the trade.
    Buy when 18 EMA crosses 30 EMA from below.

    Sell When 18 EMA crosses 30 EMA from above.

    EXIT SIGNAL :Exit the trade when there is close of the candle above the 30 EMA.

    •My personal opinion and recommendations concerning moving averages indicator;

    The advantages of using moving averages need to be weighed against the disadvantages.
    Moving averages are trend following, or lagging, indicators that will always be a step behind. This is not necessarily a bad thing though.
    After all, the trend is your friend and it is best to trade in the direction of the trend.
    Moving averages insure that a trader is in line with the current trend.Being along with the current market trend is critical for traders success in this highly profitable forex trading business.

    Advantages
    Following are the advantages of using Moving Average for making the market analysis
    * Moving Average indicator is the trend following indicator which helps us to stay along the current market trend.
    * By using two different moving averages, it gives us clear view regarding the current market scenario to obtain the entry signal.
    * Dynamic support and resistance can be spotted with the help of two different moving averages.
    * This is one of the Consistent profit making strategy, provided the traders follow strict money and risk management in their each and every trade and stick to the trading plan.

    Disadvantages
    Some of the disadvantages of using moving averages are:-
    * Possibility of False breakouts or false crossovers due to the lag.
    * It is best used only during certain specific market sessions for respective currency pairs to be traded.

    My Two Cents : From my trading experience with the use of EMA of 18, 30 i would suggest that it is better to be used during certain specific timing. Like for example for GBP/USD, GBP/JPY, EUR/USD, EUR/JPY only London market opening session is suitable such that false crossover which was formed during Asian market session can be eliminated from considering for trading.

    Irrespective of any trading strategy always use risk and money management in each and every trade to survive in the forex market. Only then profits can be reaped. Make sure to withdraw the profits made, for fulfilling the commitments.
    Never deviate from the trading plan, always stick to the ideal entry plan upon noticing the potential signal generated with the moving average crossover.

    Also do not forget to exit the trade upon making targeted profits. Only then succeeding in the forex trading business with this awesome trading strategy becomes possible. All the best to all of you. Please share your experience.

    Moving Average Indicator -

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    Last edited by Ashviniurs; 05-20-2015 at 09:35 AM.

  2. #21
    Trader layigold's Avatar
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    No trader in forex trading industry can despise the indispensability of moving averages as a powerful tools in technical analysis of the market, in fact most of us use it though in different ways and forms. Whichever ways it is being used , the most important thing is to have results to show for its use. I appreciate your thought and I have equally learned from your thread and this I suppose must have been a blessing to many. Thank you for sharing this

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  3. #22
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    Quote Originally Posted by layigold View Post
    No trader in forex trading industry can despise the indispensability of moving averages as a powerful tools in technical analysis of the market, in fact most of us use it though in different ways and forms. Whichever ways it is being used , the most important thing is to have results to show for its use. I appreciate your thought and I have equally learned from your thread and this I suppose must have been a blessing to many. Thank you for sharing this
    This is a very good explanation from the thread creator that how can we use moving average indicator in short term trading, medium term trading and long term trading. Advantages and disadvantages are also show in the thread which is good for the trader education. Its important to know the lagging nature of the indicator's, and trader should choose the London and New York session to do trade with moving average cross action

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  4. #23
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    MADC Is one indicator that everyone who is new to trading starts with before you can move to other more soffitsicated indictors and that is one thing that is an excellent advantage of this indictor this means that it's very easy to get and there for a it makes it quite awesome

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  5. #24
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    7 sma, 20ema, 55sma, 100sma, 200sma..... I have tested this MA's for a years. Exceptional accuracy confirmed so many times. Very suitable for trading for beginers as well as for expirianced traders. When price break trough one MA TP is on next one. If price broke 7 next target is at 20 etc. Simple and powerfull. Also level that is broken become resistance/support and can be used as SL level. Sometimes price get stucked between two big number MA's , for example 100 and 200, and play range bouncies for a while. That make exelent opportunity for trades too.

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    Last edited by strobstrob; 06-06-2016 at 02:56 AM.

  6. #25
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    moving average is one my favorite indicators that i use and it is widely used by the traders around the world, trading with cross over of the moving average is good but i think it should be done when there is a clear direction of the moving average and the market is trendy so this ensure that the trader trade in the proper direction and can make some profits easily.

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  7. #26
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    Moving average cross over is really a special trading way. I use 200 cross over. but here I learn a new things it may help me to proper enter the market and out the market. moving average is always a great indicator specially for new trader who haven't enough idea market.

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  8. #27
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    An EMA is really the right choice we have to develop when we have to find something out there we have to look the right form of choice we have to really work as hard and prove the given issues of the market we have to develop when we know everything we work on

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  9. #28
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    moving average is one of the best indicators in meta trader and widley used by the traders because it is the best ne for determination of the direction of the market and it is nearly foundin most trading strategies, it can be used with many settings depending on the strategy used and depending on the desiring of the trader himself.

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  10. #29
    Trader YoyO_o's Avatar
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    I follow this data with Pivot Point to trade in forex, follow the information about moving average is good for determine the pricing and considering the next price position.

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  11. #30
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    [lang=ar]Yes, friend, I agree with you
    The averages are good predictive tools, especially 50 plus 100 excellent. There are other averages, but I must say that it is not enough only if there should be other tools to confirm
    There are a lot of averages and settings developed and any trader can set their own settings through the appropriate experiment puts[/lang]

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