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Moving Averages

Falling Knife stocks-How to identify them?I have discussed in previous post about what exactly falling knife stock is with a case study. The next question would be how would an investor know that stock is a part of falling knife category? To identify such stocks, I feel you should know about 2 concepts/indicators which are Moving averages and Fibonacci retracement. I will try to make you understand these concepts and also the levels where averaging/investing can be started. 1. Fibonacci(Fib) is a mathematical concept which governs the entire universe, even our stock markets. I can't explain the entire scientific concept here so just sticking to stock market. Fib retracements help investors identify support and resistance for stock. There are 2 golden ratios which every investor must know, 38.2%(0.382) and 61.8%(0.618). When a stock is in uptrend, 38.2% is the level where most stocks retrace upto. 61.8% is considered as last ray of hope for bounce in retracement. Any stock which has fallen below 61.8% is considered weak. 2. Moving averages(MA) are indicators which are continuously changing with moving stock market. These are an average of prices over a time period, hence Time frame is important. There are many types of moving average, we use mostly simple and exponential. When I say 20 Day EMA, it is Exponential average of 20 days of closing price of stock or when I say 200 week SMA, it is simple average of 200 weeks closing price. Exponential is more used than Simple moving average which has scientific reason behind it so if you are curious, you can search for it. 200 Week moving average is considered as last ray of hope for investment. A fall below 200 Week moving average or 50 Month EMA indicates strong bearishness. 3. I have seen stocks reach from top to bottom and top again. Tata motors, HDFCAMC being few famous examples. Even, Most of real estate, PSU banks stocks are reversing. So, equity is beautiful, wild and highly unpredictable. However, A stuck investor should wait for monthly closing above 61.8% to start averaging in such stocks. Also, a closing above 200 Week EMA will slightly indicate return of bullishness and that's where reversal traders should think of investing I feel this much knowledge is enough for now. If you have got some enlightenment from above information, lets apply this knowledge on one stock where I know many many investors are stuck, Rajesh Exports. How do I know? I saw the shareholding pattern and that's where I was shocked to see the number of shareholders increase from 45000 odd to over 2 lakhs in the past 9 months! Starting with fundamentals, Rajesh Exports Ltd is 4 decade old manufacturer of Gold and Gold Products available at a PE of around 9 and sales growth of 20% in last 3 years. All the ratios feel nice to me except the operating margin which is below 2% consistently which has led to drop in EPS which is major concern in the stock. Technically, stock had a 52 week high of 1030 in Feb 2023 and it is now available at 360 odd which is more than 60% wealth destroyed. And as I said, the number of shareholders have grown 5x in the same time. (Note that FII, DII holding has reduced in same period). If i see now from a non-investors perspective(psychology explains that investor can never see the bearishness), the stock has formed a beautiful double top and broken its neckline which was 61.8% of fib retracement all ready for a further fall and I see no support till 270-300 zone(sorry investors). It is also below 200 week moving average-red wavy line(if you check monthly chart, it is below 200 month moving average as well). A perfect example of Falling knife. What next? If I were an investor, My last SL would have been 525 which is 50% retracement. Since, the stock is below 61.8% retracement , there is no chance of averaging at this moment. Hence, I feel investors should wait & watch until stock moves above 440 before averaging/entering. Don't jump in it. Wait for a big bullish monthly candle before averaging. Also.... As promised,, I am sharing you names of stock which i have identified to be part of this unloved category. As an homework, do check fundamentals and reversal levels based on what we have discussed above. The stocks are GRINFRA, TCNSClothing, Metropolis, Luxindustries, Polyplex, HLEGlasscoat, Deltacorp, Barbequenation. If you are a curious investor, even you can find such stocks and do let me know in the comments below. I would like to discuss any doubts regarding the concepts, idea or anything related to stock market so feel free to comment. Keep investing, keep minting. India has a very big future ahead so these are the best few years to invest in India.Be a smart investor because it is important that you choose the right stock to meet your financial goals.
NSE:RAJESHEXPOEducation
by chartistamey
10
A 50-day moving average (50 DMA/SMA/EMA)A 50-day moving average (50 DMA) is a technical indicator that shows the average closing price of a security over the last 50 days. It's a popular indicator because it's realistic and effective at showing historical price movement trends. Concept of 50 Moving Average 1. Entry - Candle crossover 50 MA: This refers to a situation where the closing price of a candle crosses above the 50-period moving average line. When the candle's closing price moves from below the 50 MA to above it, it indicates potential upward momentum in the price action. This could signal a bullish trend or a potential buying opportunity. 2. Exit: - Distance between 50 MA and Candle: This involves monitoring the distance between the closing price of the candle and the 50-period moving average. If the distance becomes significantly large, it may indicate an overextended market and a potential reversal. Traders might consider taking profits or preparing for a reversal signal. - Candle crossunder 50 MA: This occurs when the closing price of a candle crosses below the 50-period moving average line. It suggests potential downward momentum in the price action. This could signal a bearish trend or a potential selling opportunity. 3. No Trade Zone (Sideways): - Use Box Breakout Strategy: In a sideways or ranging market where the price moves within a defined range, a breakout strategy can be employed. A box breakout strategy involves identifying a range-bound market where the price oscillates between a support and resistance level (forming a box-like pattern). Traders look for breakouts above the resistance or below the support level to initiate trades. This helps avoid trading during periods of low volatility and indecision, typical of sideways markets, and instead focuses on capturing potential momentum during breakout movements.
NSE:NIFTYEducation
by NaveenTTR
The Ultimate Beginners Guide to Day TradingHello everyone My name is d3ffyduck I am today gonna post some cool and new tips For the beginners in Daytrading. I am gonna divide things in Chapters so you'll learn it with ease Read it till the end Hope You learn something Chapter-1 Timeframe selection The choice of the best timeframe for chart analysis in day trading can vary depending on a trader's strategy, preferences, and the market being traded. Different timeframes offer varying levels of detail and may suit different trading styles.For Example 1-Minute Chart: This timeframe provides very detailed information, showing price movements within one-minute intervals. I prefer Using it for precise entry and exit points In day trading 5-Minute Chart: Slightly less detailed than the 1-minute chart, the 5-minute chart still offers relatively short-term insights into price movements. I use to determine my momentum for the trade i want to hold for like 1-2hrs only 15-Minute Chart: This timeframe offers a broader view of the market compared to shorter intervals. I prefer it to determine my next day momentum of the market Chapter-2 Support and resistance Using RSI I know you all knows the basics for support and resistance but today i will show you the best way. Just open your chart and use RSI Indicator and we are going to mark the overbought areas high candle and oversold area lowest candle using it for different time frames. Just a note from my side do not mark those areas again if there have already a support or resistance line in different time frame and also you can remove those level of S&R which did not hold well in different time frames 1-day time frame=I have marked the regions where the RSI turned in the overbought or oversold areas. As you can see, I have not marked the support and resistance levels since they were already established from previous market overbought and oversold. 4-hour Time frame=In this timeframe, we will only identify the levels that are above 70 and below 30 in the RSI. We'll skip the R&S that are already marked on the daily timeframe. To reiterate, please refrain from marking those levels again if we can observe that our resistance and support levels have already been established on the daily chart. 1-Hour Time Frame = I've set my preferred timeframe to a maximum of 4 to 5 months. I don't want to go below this timeframe as it will create more noise. Additionally, I'll remove the support and resistance levels that didn't react well for buyers and sellers at this point to make the chart look cleaner Chapter-3 Determining the Trend Here in this chapter we are going to use only 2 Things to keep everything simple:- SMA+EMA 200= We are going to use simple indicator or just create yourself one indicator which plots both sma and ema with same 200 timeperiod. Rules are simple if below both ma look for short if above both ma look for long You can use it for 1hr and 15 min for day trading purpose Trendlines- Trendlines are your best friend.They are the building block for your Chart pattern look for trendlines in 15 min tf for day trading purpose Chapter-4 Significance of market opening closing,high,low This is one of the important chapter for day traders and i am going to tell you how an opening closing high and low effect the whole day trade. For Example 1-Open your Chart 2-Mark the opening ,closing highs and lows for previous 3-4 days 3-Those area are going to be area of interest Tip for the beginners. Do not take any trades for the first hour From the opening of the day For example if your market opens in 9:15 am dont take trades until 10:00-10:15 cause of high volatilty Another Tip for the beginners.If you prefer to take 2 trades a day close your previous 10:00 am trade At around 11:45am -12:15 pm and start looking for another one after that. the reason because i have seen this is the time for the most probable reversal or continuation of trend for the next leg of the day Chapter-5 Significance of Gaps in the market Gaps are one of the best way to decide what will be the market trend for the rest of the day There are two type of gaps in the market 1-Gap up 2- Gap down Tip for the beginners Only trade in the strong gap up or down and as i said before do not trade in the first hour of the opening Ill show you some scenarios of gap Trading with respect to opening of the day Scenario 1st strong gap up+ Stayed above above the gap and opening for the 1 hour(9 am-10am) We can see we had a strong opening stayed above the gap up and open for atleast 1 hour so after this the trend is decided Tip for the beginners Always follow strict Risk and Reward ratio like i use 1:1.5 Scenario 2nd strong gap up+ stayed below the gap and opening for the 1 hour(9 am-10am) We can see we had a strong gap up and opening but price stayed below the opening for 1 hour so we took the short as dropped below previous closing/high Similarly we can use this for gap down scenarios Final tip from my side are:- Do meditation for 15 min before trading hours Always use stoploss Use your preferred Risk Reward ratio like 1:1.5 Do not trade in opening Hour Gaps are like your friend Trends are like a path to success Do not overtrade Dont only rely on indicators there isnt any indicator which can make you rich Use only basic indicators such as Ema,Macd,Rsi and ATR PLEASE UPVOTE AND FOLLOW FOR MORE EDUCATIONAL CHARTS AND STRATEGIES
NSE:BANKNIFTYEducation
by D3ffyDuck
1
Moving Averages are really powerful. . . !Can you believe they are... Moving average(MA) is one of the oldest indicator. Lot of people (including me) would reject the idea that such a simple indicator can be of any use in modern day considering availability of advance computer tools. I came across free training videos of Oliver Velez who explained on how to use it. When I back tested his logic I was really surprised.. Since then I have kept 20SMA and 200SMA as default on my chart. Best part of this concept is, it works on any time frame.! MA can answer following key questions which helps anyone become good trader/investor.. Q1. Is the stock trending? and What is the direction of trend.? A1. If 20MA is flat stock is not trending. Direction of 20MA is direction of trend. Q2. How old is the trend. (if trend has just started I can board it and if it is too old I will not) A2. If 20MA is not too far from 200MA trend has just started. If 20MA is too far from 200MA be alert trend might be matured. Q3. Am I buying in value zone so that my SL is small.? A3. Buy when stock retraces near 20MA. Q4. Am I exiting at a value where I have got good amount of move. So that my profits are much higher than losses. A4. Exit when stock is far away from 20MA. I have marked all above on these chart for easy understanding. As we can see FAR and NEAR are relative terms. Hence it takes good amount of practice to grasp and trade this concept. Considering volatility lot of whipsaws can happen in intraday and daily time frame. So I started using it on weekly time frame and started getting good results with holding time of 3~10 weeks. However once you are confident in your stock selection criteria this is good way to ride a trend. We can compare trading using MA to flying kite. It is simple but not easy. One need to practice to master the skill. One need to get feel direction and gust of wind, Understand behavior of kite and finally time the action to fly kite. Hope this post will help you appreciate this oldest indicator...
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NSE:GESHIPEducation
by yndesai
24
How to set an alert for BankNifty Intraday Strategy [5min TF] ? Set Alert on 77% Profitable Bank-Nifty Back-tested Intraday Strategy with FREE TRIALS Trend Follower Intraday for 5 minute Time-Frame (Adjustable) , that has the time condition for INDIAN | CRYPTO | FOREX Markets // ══════════════════════════════════════════════════════════════════════════════════════ // Unlike the Free Scripts - Risk Management , Position Sizing , Partial Exit etc. are also included . Send us a Message to know more about the strategy. // ══════════════════════════════════════════════════════════════════════════════════════ // The Timing can be changed to fit other markets, scroll down to "SQUARE-OFF TIME" to know more. The commission is also included in the strategy . The basic idea is when , 1) EMA1 crosses above EMA2 , is a Long condition. 2) EMA1 crosses below EMA2 , is a Short condition. 3) Green Section indicates Long position. 4) Red Section indicates Short position. 5) Allowed hours specifies the trade entry timing . 6) ATR STOP is the stop-loss value on chart , can be adjusted in INPUTS. 7) Target 1 is the 1st target value on chart , can be adjusted in INPUTS. 8) RISK is Maximum Risk per trade for the intraday trade can be changed . 9) Total Capital used can be adjusted under INPUTS. 10) ATR TRAIL is used for trailing after entry , as mentioned in the inputs below. 11) Check trades under the list of trades . 12) Trade only in liquid stocks . 13) Risk only 1-5% of total capital. 14) Inputs can be changed for better back-test results, but also manually check the trades before setting alerts 15) SQUARE OFF TIME - As you change the time frame , also change the square-off time to the candle's closing time. Eg: For 3min Time-frame , Hour = 2Hrs | Minute = 57min 16) Strategy stops for the day if you have a loss . 17) COMMISSION value is set to 10Rs and SLIPPAGE value is set to 1 . Go to properties to change it . Apply it to your charts Now ! Send us a message for FREE TRIALS | Instant Access Thank You ☺
NSE:BANKNIFTYEducation
by The_Algo_Engineer
1
What is moving average?If you have been in the market for some time, you may have heard of an indicator called the “moving average”. Today we are going to take a deeper look at the indicator, along with a few examples of how pros use it. This post will also lay the groundwork for future posts about more advanced moving average topics. Please remember this is an educational post to help all of our members better understand concepts used in trading or investing. This in no way promotes a particular style of trading! The post will shed some light on the following topics: - What is a moving average? - How does moving average work? - Correct usage along with exhibits Introduction A moving average (MA) is a technical indicator that is commonly used to determine the direction of the trend. By continuously recalculating the average based on the most recent price data, a moving average assists in smoothing out the price data. This helps in reducing the impacts of random short-term variations of the price over a given period of time. Working with moving averages - Moving averages are typically calculated to determine the direction of the trend and are sometimes used as dynamic support and resistance levels for a given time period. Exhibit: Moving averages acting as a dynamic support Exhibit: Moving averages acting as a dynamic resistance - Since a moving average is derived using historical prices, it is a lagging indicator. - The lag increases with the length of the moving average. As a result, a 200-period moving average (which includes prices for the previous 200 periods), will lag significantly behind a 100-period MA. - Likewise, a moving average with a shorter period (faster MA) will be more sensitive to price changes as compared to a slower one. Usage - Faster moving averages are typically employed for short-term trading, while slower moving averages are more often utilized for understanding longer-term market dynamics. - Moving averages are applicable to all time frames. Therefore, experimenting and testing several settings over a range of time frames is the best approach to determine which one works for you. - A rising moving average indicates strength, while a falling moving average indicates weakness. Hence, in general, a stock is said to be in an uptrend if its moving average is increasing, whereas in a downtrend if MA is decreasing. - In general, a stock may show bullish momentum if there is a bullish crossover, i.e. when a faster moving average crosses above a slower moving average. - Conversely, bearish momentum may be expected on a bearish crossover, which occurs when a slower-moving average crosses below a faster-moving average. Thanks for reading! As we mentioned before, this isn't trading advice, but rather information about a tool that many traders use. Hope this was helpful! See you all next week. 🙂 – Team TradingView Feel free to check us out on Twitter , Instagram , and YouTube for more awesome content! 💘
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NSE:RELIANCEEducation
by TradingView
17
Using the Moving Averages and RSI to optimize buying processIn this chart I have explained my rationale using Moving averages, relative strength and RSI to initiate a buy on this scrip. I always use a weekly chart to check for overall trend and analysis and based on it will initiate a buy on a Daily chart. Explanations are given on the chart. The idea is get the maximum conditions in our favour for a profitable trade. Hope it will be helpful. Another important thing is to always define a stop loss if the trade does not go according to plan.
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TEducation
by TheUnlearningOne
25
All About 200MA |How to use it to take trade with example.Part-1NSE:HINDPETRO All About 200 DMA. How to use it to take Mid/Long term trade. 1)What is 200DMA? It is simple technical analysis tool that is an average of daily close price of last 200days/candles. It is used to smooth out the price and it will remove the intraday fluctuation noise. 200DMA == 200 Daily Moving Average 2)200DMA is the one of the main critical support/resistance that it will work in downtrend or in uptrend. --------------------------------------------------------------------------- How to use it and how to take trade? 200DMA as support: If price is above 200DMA then it will work as Support and it is time to buy trade opportunity. Please refer below chart: 1Day Time Frame 200DMA as resistance: If price is below 200DMA then it will work as resistance and it is time to short/sell trade opportunity. Please refer below chart: 1Day Time Frame ------------------------------------------------------------------- Steps to follow to find and take Trade. Step: 1 Need to find Chart pattern on Daily Time frame; such as bullish flag, triangle, rounding bottom, cup and handle head and shoulder etc… Step: 2 If there is no clear pattern then Judge the price action. If it is trading in uptrend/downtrend parallel channel , If it is in accumulation , if it is in distribution etc…. Step : 3 Find Support and Resistance on Chart Once these 3 steps are clear you have most of all to take mid/long term trade. ------------------------------------------------------------------- NOW Let’s look at example. I am taking HINDPETRO for example. This Part 1 is with buy trade example. Let’s take Step: 1 So, in below chart we found one pattern which is Cup and Handle Pattern. So, our entry will be on breakout of it. Please refer below chart: 1Day Time Frame Step 2 is not needed as we already found Pattern. Step 3 : Please refer below chart for Support and resistance level. We can see that it is having immediate resistance at 190 level and major resistance at 200 Level. Breakout on 190 level will be quick buy till 200 But safe buy will be on breakout of 200 level with SL just below 190 level which will be 185 level for mid/long term trade. Please refer below chart: 1Day Time Frame -------------------------------------------------------------------------- Now the main point about Target: What can be the Target. As our SL is decided at 185 level. To decide our Target, we can go a back in history where earlier it had taken support at 200DMA and gave bullish rally. So, if we see in month from May to Aug it rallied almost 94.65 points after it took last support in near range from 200DMA. Please refer below chart: 1Day Time Frame So, let’s take target of max 90 points from the level of 200DMA. Level 179 was the level at which it took support from 200DMA and now adding 90points we can see 269/270 as our Target. Let’s consider our buy trade entry at 205 level. And Our Target will be 270 and SL will be 185. Hence our Risk Reward will be 65 (up move) / 20 (down move till SL) = 3.25 : 1 Please refer below chart: 1Day Time Frame Even we can see that stock even move higher than our target. But to get higher target we will need to use FIB Retracement tool. For this article let’s keep it till this. Hope I made it easy to understand. Part 2 for 200DMA short trade with example will be posted separately. Do comment your doubt or suggestions. **************this is for educational purpose only**************
NSE:HINDPETROEducation
by Trading_hawk
12
Biocon - A case study for Long Term InvestmentThis is the monthly chart. Recently Biocon broke the support levels of 360-365 and this resulted in a major 10% fall upto 330 levels. For long term investors, the question that arises here is - Where is the next buying zone? From which price levels the stock will show a bounce back? Here we will learn the use of EMA or Exponential Moving Average. Every stock respects a different exponential moving average and hence a single EMA cannot be used as a common standard. From the historical monthly chart, we can observe that the stock has been respecting the 50 day EMA (more than 3 times) in the Monthly Timeframe for the past 8 years. Now the stock is coming down to the 50EMA support having broken the 20EMA support zone. Thus we can initiate a buy around 300 levels, where the 50 day EMA support exists. When to buy? We should buy only when we receive multiple confirmations. Those should be: a. Stock respects the 50 EMA support. b. Stock forms a bullish hammer or bullish harami candle from the 50 EMA support. Only when these two conditions are satisfied, we can initiate a BUY on this stock.
NSE:BIOCONEducation
by tksthathachari
5
How to Execute the Trend trading system?Look for Low risk, High reward, and High Probability setups. – Richard Weissman Scenario Many traders get destroyed by fighting the trend, insisting that the market is due to reverse itself or they try to chase the market. They may try to catch short-term countermoves in hopes of making a few quick points, or they may always look to catch tops and bottoms in hopes of capturing the big moves. All these traders end up trading against the longer-term trend and against the odds. How to find low risk, high reward, and high probability setups? Use of Trend Following indicators for High Probability trading A-Use of Moving average. If you just jump into trades because the market is trending, you will be guilty of chasing the market. You have to remember that the market will never go in one direction nonstop, the market typically congests or retraces after a strong move. When the market is trending and you are looking for a place to get in, wait for it to retrace to one of the moving averages or trendlines. When the price is just riding on the moving average or trendline, your downside risk is smallest because you know you will be out as soon as it breaks the line. B-Use of ADX (only for conformation) The ADX does not tell you the direction of the trend; it only tells you if there is a trend and measures how strong it is. On its own, the ADX lags price action and is not a great indicator, and so one should not use it to trigger trades. Instead, it should be used as a way to get confirmation of whether the market is trending or choppy and how strong it is . The level between 20 and 30 is considered neutral. The higher the level, the stronger the trend. When it is rising, one should trade only in the direction of the trend. When the ADX is below 20, you can consider the market to be choppy and range-bound, and a trending system will not work well, resulting in whipsaws. Things to Remember while Trading with the Trend 1. Know what the trend is. 2. The best trades are made in the direction of the trend. 3. Assume that the main trendline or moving average will hold. 4. The longer the moving average is, the better it defines the trend. 5. Wait for the pullback. 6. Don’t chase the market. 7. Don’t fight the market. 8. Even in the strongest trends there should be some retracement. 9. The closer the market is to the trendline, the better the risk/reward ratio is. 10. Use ADX to determine the strength of the trend. 11. Higher the level of ADX, the stronger the trend, below 20 consider the market to be choppy 12. Hold trades longer in a strong trend. 13. Wait for confirmation of a trendline breaking before reversing position. 14. Know where the Support levels are. 15. Place stops outside the Support levels. Closing Words- A successful trader will trade primarily in the direction of the major trend, waiting for retracements to get in.
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NSE:WIPROEducation
by Indrajit08
61
200 (DAILY) SIMPLE MOVING AVERAGEThe 200-day simple moving average (SMA) is considered a key indicator by traders and market analysts for determining overall long-term market trends. The indicator appears as a line on a chart and meanders higher and lower along with the longer-term price moves in the stock, commodity, or whatever instrument that is being charted. The 200-day SMA seems, at times, to serve as an uncanny support level when price is above the moving average or a resistance level when price is below it. As a very long-term moving average, the 200-day SMA is often used in conjunction with other, shorter-term moving averages to show not only the market trend but also to assess the strength of the trend as indicated by the separation between moving average lines. For example, comparing the 50-day SMA and 200-day is relatively common. When moving average lines converge, this sometimes indicates a lack of definitive market momentum, whereas the increasing separation between shorter-term moving averages and longer-term moving averages typically indicates increasing trend strength and market momentum It is possible that there is also something of a self-fulfilling prophecy aspect to the 200-day SMA; markets react strongly in relation to it partially just because so many traders and analysts attach so much importance to the indicator. It is acting as Dynamic Support currently.
COINBASE:ETHUSDEducation
by TraderLeVeR
Identify Trends Using Moving Average and Trade accordinglyMoving Average (MA) is a widely used technical indicator that smooth's out price trends by filtering out the “noise” from random short-term price fluctuations. The most common applications of moving averages are to identify trend direction and to determine support and resistance levels. When asset prices cross over their moving averages, it may generate a trading signal for technical traders. (In this chart when red line makes a cross over the green line on the Upside a Buy signal is generated, similar when the red line makes a cross over the green line to the Downside a Sell signal is generated) Moving Average Length: Common moving average lengths are 10, 20, 50, 100 and 200. These lengths can be applied to any chart time frame (one minute, daily, weekly, etc.), depending on the trader's time horizon. Here in this chart I have used (9,21) length to identify short term trend. Now, lets talk about how to prevent our self from taking trade on false cross over (Here in this chart what i observed is-MA tends to provide more accurate signals when the cross over happen in either upward or downward direction, while a flat crossover as spotted within the circle gave a false move and an indication of a sideways trend please do like, share and comment if you have any suggestion for me Thanks
NSE:SBINEducation
by N50-ANALYST
6
HOW TO BUY STOCKS USING MOVING AVERAGEMoving average is the most common indicator in technical analysis also be the most important indicator, as it serves as the foundation of countless others. 1) What is a moving average? Moving average (MA) is a simple technical analysis tool that smooths out price data by creating a constantly updated average price. The average is taken over a specific period of time like 10, 20, or 50 days, or any time period as suitable. The indicator is known as a ‘moving’ average, since its value keeps changing as the data keeps changing over time. I have used a band of 20 DMA. Here’s an example. Say the closing prices of ITC for the last 5 trading days are: Closing prices Day 1: Rs. 215 Day 2: Rs. 220 Day 3: Rs. 222 Day 4: Rs. 226 Day 5: Rs. 239 In this case, the moving average of ITC for a 5-day period is calculated like this. = (Day 1 price + Day 2 price + Day 3 price + Day 4 price + Day 5 price ) ÷ 5 days = (Rs. 215 + Rs. 220 + Rs. 222 + Rs. 226 + Rs. 239) ÷ 5 days = Rs. 224. When used appropriately, they provide easy insight into a trend’s direction, its magnitude, support and resistance. Works magically, for those who depend on support and resistance strategies to generate entry points. However, for those who prefer to trade price reversals, using moving average crossover strategies is perfectly viable as well. 2) How to buy stocks using moving average? (I use a band of 20 DMA as my strategy) a) By identifying support and resistance as shown in the chart: A moving average can also act as support or resistance. In an uptrend, an average may act as a support level, as shown in the chart. This is because the average acts like a floor (support), so the price bounces up off of it. In a downtrend, a moving average may act as resistance; like a ceiling, the price hits the level and then starts to drop again. b) By identifying the trend as shown in the chart: Look at the direction of the moving average to get an idea of which way the price is moving. If it is angled up, the price is moving up, angled down, and the price is moving down, if moving sideways, and the trend is likely in a range. Disclaimer I'm not an expert, i'm still learning. Sharing knowledge will enrich me with more knowledge. This strategy works well for me it may or may not work for you. I tried to explain in a layman's point of view. I reserve the right to be wrong.
NSE:NIFTYEducation
by Chinmayonniftyy
Learning about Exponential Moving AverageEMA full form is *Exponential moving average*. you can google this for detailed explaination and formula. I use 30 week EMA for my stoploss that means, the length chosen is last 30 week on weekly timeframe. if you are using daily timeframe you can use 150 Day EMA (as 5 working days for week * 3o weeks). NOTE- The length choosen is not an fix and not compulsory for use. i use this length from trader whom i follow. Try and backtest different lengths (EX. on weekly-12,30,40 and on daily-21,50,150,200) use which suits your style and pace TO SET EMA ON YOUR CHART- choose Timeframe as W (week) 1. Go to indicator and strategies on top of chart 2. search Exponential moving average select first inbuilt option 3. Set length as 30 click OK. Now you are ready to use.
NSE:NIFTYEducation
by Money_Monk
5
ADANIPORTS ANALYSIS200 DMA is a great simple strategy which provides good RR trades such as this one. The idea here is simple. Markets tend to be range bound 80% of the time, which is called the contraction phase. The other 20% of the time the market is breaking out, called the expansion phase. To win the game, it is important to understand the probabilities and play the probabilities. For the price to breakout above key resistance levels and breakdown below key support levels, there has to be a catalyst that enables this to happen. The catalyst can be macro-economic news, good/poor earning reports, breakout of war, elections etc. Such news comes about often but is still rather rare. Range bound trades enable a higher probability of success and lower risk as the stop loss that one can place is closer to the price. A breakout trade on the other hand will have a stop loss on the other extreme of the range, increasing the risk significantly. Hammer pattern which has been formed on this chart is a good indication of a a fresh bearish move starting. It shows that the higher prices have been rejected yet again. DM me if you have any questions and LIKE if you found this helpful! :)
NSE:ADANIPORTSEducation
by ArcherDAVIS