I was sent a request from a blog reader asking “i hope you can help me can you explain to me how to read moving average ma 20 ma 50 ma 100”. All I can do here is explain how I use Moving averages for my own trading.
Moving averages can be used in several ways. There are two main ways that I use them for my own trading. Firstly they can be used to help identify trends. The way the 20, 50 & 100 moving averages would be used to identify a trend is by looking at their value and the direction they are currently pointing.
For instance we could suggest an uptrend can be defined if the 20 is above the 50, the 50 is above the 100 and all three moving averages are increasing in value. The converse is true for a down trend.
Moving averages can also be used to make trades or exit trades. For instance a simple moving average system could be to buy when the 20 crosses above the 50 and sell when the 20 crosses below the 50. In fact I one of the strategies I have on my spread betting strategies page is a moving average cross over strategy. It uses the 50 & 200 Simple moving averages but still illustrates its use.
This is all I really use moving averages for. I’m sure there are far more uses for them but I’m a big fan of keeping things simple so I only use them as I’ve described. If you have more questions about moving averages I’m sure there will be people over on the spread betting forum that can help.
Thanks again to Chris for his comments on my last blog post, “Where now for the FTSE“. I kind of owe Chris a slight apology as I think I may have come across slightly rude in my latest news letter. Thanks again for responding with the comments it’s always interesting to get someone elses perspective on these things. I’m not sure about sending you Malcoms new book though. I’ve already sent one to you for guest posting, I think I will hold onto this one for a new guest poster.
My own spread betting is still pretty quiet. There haven’t been any opportunities coming my way but I’m happy to wait and see. I have that much to be doing with other stuff I’m actually glad it’s gone a bit quiet on the trading front, on the down side it does mean I don’t always have much to blog about. Still there is always the FTSE for me to speculate on, even if I don’t trade it.
Enjoy the rest of the bank holiday weekend everyone.
Until next time,
“May the markets be with you!”
The Spread Betting Beginner