Moving Average is the king of trading system indicators, and its abbreviation is MA. The phrase "the great way is simple" is fully reflected in the moving average system. Eighty to ninety percent of the indicators are evolved based on the moving average indicator.

The moving average has five most characteristics. It is one of the oldest, easiest to understand, best to use, easiest to execute and most effective indicators among the K-line indicators. It is used by traditional big funds, smart money and many legendary traders.

Principle: A line obtained by calculating the average value of the K-line within a certain period of time. The moving average (MA) is changing and updating at any time in the K-line chart to reflect the recent price changes and trend trends.

Example of setting parameters: For example, if you choose to set the 169MA at the 4-hour level in the K-line chart, the line trend that is automatically calculated and displayed will represent the trend of the last 169 4-hour K-line average values.

Recommended daily MA parameter 120.200

Recommended small level MA parameter 144.169

Parameters are personal preferences and can be set flexibly. When reviewing the market, you can set them as you find most useful and develop your own trading system.

Simple understanding: The trend reversal signal is when the K-line crosses the moving average upwards for bullishness, crosses it downwards for bearishness, and crosses it horizontally for sideways trading.

Trend judgment: Using the moving average can help traders identify whether the current market is in an upward trend or a downward trend. When the K-line closes continuously above the moving average, it is usually considered an upward trend; otherwise, it is a downward trend.

Simple understanding: The current price K-line closing price is above the moving average (MA), which is bullish. The K-line closing price is below the moving average (MA), which is bearish.

Support and Resistance: Moving averages can act as potential support or resistance levels. In an uptrend, a moving average may act as a support level when prices fall back; in a downtrend, it may act as a resistance level when prices rise and rebound.

Confirm trend strength: When the K-line price is far away from the moving average, it indicates that the market trend is strong; when the K-line price is close to the moving average, it may indicate that the market trend is weakening.

Review of the 120ma daily market in 2021

Regarding the steps to develop your own trading system: Let's take the recent market of $BTC as an example, which can be roughly divided into five steps:

1. System parameter setting: select one or more moving averages as a group, and the K-line time level is 4 hours. For example, if the system parameter of a single moving average is 169MA, this moving average is a 4-hour 169ma system.

2. Opening signal determination: When the K-line intersects or touches the moving average, the trading signal is triggered.

3. Execute the transaction and open a position: If the closing price of the K-line is above the moving average, you can go long, and if the closing price of the K-line is below the K-line, you can go short. The simplest system should be simple to execute.

4. Set stop loss: The stop loss point is the highest or lowest point after the contacted K line closes. This is the minimum stop loss rule. If you want to be safe, you can set a little more stop loss. The increase is usually 1% or 2%. After the order has a lot of profit, you can set a stop loss to protect your capital. The first thing to do after opening a position is to find a stop loss point and set a stop loss. You must set a stop loss. This is a trading rule.

5. Find the take-profit target: The take-profit target is usually the previous high or low of the period. You can also set a moving take-profit in batches, or a fixed profit-loss ratio take-profit. This depends on your personal risk preference.

6. Look for high-quality trading signals, that is, look at the profit and loss ratio. If the stop loss setting for this transaction is too large, you can choose not to make this transaction. If there are frequent fluctuations, you must reduce the trading frequency.

Taking recent practical examples as an example, the following figure shows practical and review cases at several different levels. The stop-loss finding method is indicated in the figure.

Advantages and disadvantages of moving average:

Advantages: The moving average will not go against the trend, never carry an order, the stop loss is clear and very small. The moving average is the simplest and easiest to execute system.

Disadvantages: The smaller the level, the easier it is for the moving average and the K-line to get entangled when the market fluctuates sideways. If you do it after the fluctuation begins, it is easy to hit stop losses frequently.

But once the trend starts, you can increase your position all the way. It’s really great and very suitable for capturing market transitions and explosions!

Going with the flow and simplicity are fully reflected in the moving average system. After judging the trend, you will not make the mistake of trying to touch the top in an uptrend or buying the bottom in a downtrend before a reversal signal appears. You just need to wait patiently for the signal and you will win in one go.

pay attention:

1. Buy and hold after opening a position, control your emotions, set a stop loss, set a take profit, wait patiently, and let the profits run. Be a person who abides by the rules and has principles. If you actively destroy the trading system and fail to control your inner demons, you will not win. As long as you abide by the rules, even if the position is stopped, this transaction is still valid.

2. After developing your own trading system, you can use the method of replay or actual small positions to train the actual trading statistics of win rate and profit and loss.

3. From quantitative change to qualitative change, start with small funds and from small level to large level. The larger the moving average level, the better the effect.

4. Don’t over-interpret the moving average. If it crosses upward, it means it’s bullish; if it crosses downward, it means it’s bearish. A false breakthrough is a false breakthrough. If it’s a scam, stop loss should be made. The simplest way is to understand it simply.

Words of experience: Trading is a gamble, but it is not entirely a gamble. Some people use a capital of $10,000 to carry a position against the trend and keep adding positions until it explodes, while others use a capital of $100 to increase their positions in line with the trend and make a small profit. Trading is not about emotional chasing of gains and losses. Gambling also requires skills, but technology can only account for 10% or even 5%.

Pay special attention: When trading, do not use emotions to open positions or stop losses. Controlling emotions and staying rational is the most important thing. Controlling emotions accounts for 80% to 90%, and the rest is left to 5% of luck.

But trading technology is indeed necessary and indispensable. I have always hoped that everyone can learn trading technology that they can understand and use. If you have the technology, you don’t need to ask others for help. What you learn yourself is yours. You don’t need to learn from others and you won’t lose money blindly.

Finally, I hope all my friends can find their way to wealth.

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