Moving Average – Simple and effective

Moving Averages are very useful in a strong trending market. It fairs poorly in a sideway makret.

There are 2 types - EMA and SMA. I like both.
In my charts, I always use 10 EMA and 25 EMA together with 200 SMA.

One of the simplest strategy

When the stock is trading above its 200 SMA

1. Buy when the 10 EMA crosses the 25 EMA upwards. (SEE 1. on CHART)

2. Buy when the stock dips and trade in between the 10 EMA and 25 EMA line, followed by a break out of the 10 EMA line upwards. (SEE 2. on CHART)

3. Don't buy on 3. This is because stock dipped in between 10 EMA and 25 EMA line, but failed to break out above the 10 EMA line. There was actually a fake breakout if you look carefully. However, stop loss should have save us from any severe loss. (if you don't get it, contact me).

WHEN the stock is trading below its 200 SMA

4. Short when the stock retraced to the 10 EMA and 25 EMA line followed by a break down under the 10 EMA line.

5. SAME.

6. I did not circle it, but you should guess it... Don't SELL on 6. This is because the stock retraced to theZONE but failed to break out. Signal a possible change of trend.(let's call the in between 10 EMA and 25 EMA line the zone).

THIS STRATEGY works with good stop loss management.

With this strategy, whenever stocks travel into the ZONE and bounce back to its original trend, then they are a good buy or short.

However, if stocks travel into the ZONE but fail to bounce back, then it signals a possible change in the trend.

Use this strategy with FIBONACCI and others to make it even more accurate!