Learn how to cooperate with moving average and K-line,
Earnings are at least tripled.
Think back to when I first entered the trading market
I tried my best to find knowledge about this on the Internet
Hopefully the sooner you learn everything the better
In this way, actual combat can begin as soon as possible
start making money
at this time
Moving averages are usually the first technical indicators I learn.
Most of the online teachings teach how to use two moving averages.
A quick one
A slow one
When the fast price crosses the slow line from bottom to top, you buy
When the fast line crosses the slow line from top to bottom, you sell
This kind of golden cross and dead cross trading strategy
for newbies
It's like a treasure
Because compared with other more complex technical indicators,
For Xiaobai, the matter of golden cross and dead cross
At least it's feasible
Can be cashed out immediately
If you really believe it
Enter the market immediately
The result can be imagined
It must be a big loss
Then I feel nervous every day
very angry
Why do you lose money?
Resentful to heaven and earth
Complaining that the moving average is useless and rubbish
What I said above is 100% my real experience.
Mistakes I made when I first started trading
I believe this is also the experience of many newcomers today.
And today I want to share with you through this article
All the moving average techniques I have learned over the years
Summarize the mistakes you made before and what you learned from them
That way you won't make the same mistake I did
At least your road will be smoother than mine.
I summarized it
Most people have a wrong understanding of moving averages
It's just too superficial
It is too simplistic to imagine this matter
It’s just a simple and crude way to buy when you see a golden cross, and sell when you see a dead cross.
In fact, what we really want to do
That’s how to think about how to use moving averages
to maximize your profits
How to improve your trading performance
Today I will focus on two major themes
Discuss with everyone
1: Is there a universal parameter setting for the moving average?
2: How to use moving averages to help us triple our return rate
I hope you will spend 5 minutes
After reading this article
Finally some inspiration
Let's get started right away!
The secret of moving average 2
What is a moving average?
Conceptually well understood
As the name suggests, it is the average price within a certain period of time.
Graphically presented with a line
There are three common moving averages
SMA（Simple Moving Average）
WMA（Weighted Moving Average）
EMA（Exponential Moving Average）
SMA simply divides all prices directly
get an average
Relatively slow to respond to recent price and market trend changes
EMA and WMA have the same concept
Just the algorithm is different
They will tend to have more weight
So the speed of change will be faster
Will be more sensitive to recent large price changes
1: Is there a universal parameter setting for the moving average?
In fact, about the moving average
The biggest question is whether there is a universal parameter for the moving average.
What are the best parameters?
20? 50? 100 or 200?
This question is like if you go to a coffee shop
Tell the store clerk:
Please give me a cup of coffee!
The clerk asks you:
gentlemen
What kind of coffee do you want?
I said I don't understand this
Just give me a cup of your best coffee
Usually go here
Encountered an impatient store clerk
I'll give you a cappuccino
You pay
then leave
Just like some online teachings tell you
What 144EMA and 68EMA do you use?
If 68 crosses the EMA of 144, just buy or sell it.
Totally confusing
on the contrary
The responsible and patient clerks will guide you slowly:
gentlemen
Would you like iced coffee or hot coffee?
Do you want coffee with milk or without milk?
The milk foam on Cappuccino is relatively soft.
Mochachinno has chocolate syrup, which is a bit sweet
Espresso is rich in oil and leaves a sweet and fragrant flavor.
If you like black coffee, you will definitely be satisfied
same
As a responsible and patient trading coach
I will ask
What is your purpose of using moving averages?
Do you want an objective indicator to judge long-term trends?
Or are you trying to get a better entry point?
Or do you want to use a moving average as a stop loss point?
The above things
In fact, everything can be done using moving averages.
But here comes the point
I can tell you here very responsibly
There is no best moving average parameter setting in this world.
Only the most suitable parameter settings!
And this parameter should not be determined by you or me
It's up to anyone to decide
What decides this is the market itself
According to different market conditions, different trends, strength and weakness
The most suitable parameter settings will also be different.
We will judge based on two words
Which period moving average
Best for this market
These two words are
obey
it's here
I use the three most common moving average periods of 20, 50, and 200 as examples.
Let’s look at examples of the above three parameter settings being adhered to by the market.
We see the picture above
Prices are currently in a downward trend
We see that every time price touches the 20EMA after
They all continue to fall as if under invisible pressure.
this tells us
The market is currently adhering to this 20-period EMA
Let’s switch to the 50 and 200 period moving averages
Let’s compare together
Do you see the difference?
Confirmed on the side respectively
The market is in a strong trend
Because the 20-period moving average is best suited for a relatively fast
And the trend of correction is relatively small
Example 2
I use a 50 period EMA
Also see that the market is adhering to the 50 period moving average
This situation represents that the market is in an upward trend
If you use 20 and 200EMA to see
You will find that it is not very suitable for 20EMA
Because it keeps going back and forth between prices
200EMA is too far away from the price
last example
200EMA
200EMA is more suitable for a long-term and relatively weak trend
Although the distance between each price contact is relatively far,
But looking at the big picture
The market is following this 200-period moving average
overall
The upward trend continues
How to use moving averages to double your income 3
2: How to use moving averages to help us triple our return rate
Next I will talk about the second one
More questions that friends care about
This is how we use moving averages to improve our trading
Here I will divide into two things
First: use the moving average as a filter condition
Second: Use the moving average to find a better entry opportunity
Get a better profit-loss ratio
We just said
Moving averages of different periods can reflect trends of different strengths and weaknesses.
20, 50 and 200EMA moving averages
Represents short-term, medium-term, and long-term market trends respectively.
Here I will take the long term trend
That is, 200EMA is an example
If price remains above 200EMA
We can judge that the long-term trend is upward
If price is below 200EMA
We can then determine whether the long-term trend is down
Of course, this is just a very rough judgment method.
The best course is to use PriceAction (price action trading method)
But for newbies
PriceAction (price action trading method) is relatively complex
So I suggest that before you learn PriceAction (price action trading method)
You can temporarily use a 200EMA as a filter function
Filter out some transactions that conflict with market trends
I don’t mean that you can’t do counter-trend operations.
If you do counter-trend trading well, you can be very profitable.
But trading against the trend has a low winning rate
Relatively high requirements
A deeper understanding of the market is required
Friends with little experience
I hope you learn to trade with the trend first
Try to follow the general direction of the market every time you trade.
Let's look at this example
Price is above 200EMA
Let's say I see a sell signal
go short
Logically, my take profit should be placed at 200EMA.
on the contrary
Suppose I make a trend trade and go long
My profit margin is much larger
You can always go to the next key level of the market (that is, the main support and pressure level)
Generally speaking
Before the market reaches a pressure point
Trading with the trend is the best choice
Just like the current BTC market
From 1800$ to 20000$
From 20000$ to 30000$
From 30000$ to 40000$
......
No one knows where the top is
Then let’s not guess the top
Thing 2
How to use moving averages to find a better entry opportunity and achieve a better profit-loss ratio
How to jump on a big trend
Here I will use two moving parallel line trading techniques to compare
They are Jin Cha and Si Cha
and
The interaction between price and moving average
I personally think that a more logical trading method is to look at the interaction between price and moving averages.
same chart
Two different trading methods
The same stop loss point
The same take profit point
Because the timing of entry is different
The results are two different things.
On the left is a signal using the 20EMA to cross the 50EMA downwards
The profit-loss ratio for entry is 3.65
The right side is based on the interaction between price and 20EMA.
The profit-loss ratio is 8.32
ah!
see it?
Although I have carefully selected this situation as an example.
But similar situations will continue to appear in the market
Let’s look at the example of the dead cross on the left
20EMA crosses below 50EMA
Use the previous high level as a stop loss point here
Suppose we are great
Can jump on the whole trend
For every 1 yuan of risk we invest, the return is 3.65 yuan
Let’s look at an example of price interacting with EMA
All other conditions remain unchanged
Because we saw the price made a false breakout at the 20EMA
At the end of the next Yin and Yang line, a bearish engulfing K-line pattern appeared.
We entered the market two Yin and Yang lines earlier than the Sicha
React faster
So the rewards you get are a little bit more
Do you understand?
All conditions remain unchanged
As long as you have a better time to enter
There will be a better profit-loss ratio
You only have to win once at the critical moment
It can offset your several failed transactions.
Only in this way, over time and over time
Only then can you make money
make big money
Those who play short-term in and out
Very few make money
And still very tired
so
for newbies
I would like to advise you from the bottom of my heart
There are hundreds of technical indicators on the market.
You really don’t need to learn them all
Bit off more than you can chew
You just need to choose one
plow deeper
Learn it well
Totally enough for you
I have seen too many masters who can achieve 100% profit by relying only on K-line.
Countless
Next
Let’s look at another example of price interacting with a moving average
This is a 200EMA
Within this cycle of approximately one month
We see that price only has two chances to touch the moving average
In other words, we only have two trading opportunities
The first time we see a false breakout at 200EMA
Bearish Engulfing Pattern
And what we see is that the shadow lines are telling us
The price has tried to go up but was rejected.
The second time we saw the price make false breakthroughs near the EMA twice in a row
Add a double top pattern
Likewise, we are entering the market to go short again.
Same as the first time
The results are all good
The two just mentioned are through the interaction between price and moving average.
Get an example of a better profit-loss ratio
You need to know that the moving average is actually a dynamic support and pressure level.
Whenever the price pulls back to this key level,
We only pay attention to whether there is an opportunity to enter the market
Transactions made in this type of position
Usually can have a good profit-loss ratio
This is the moving average trading method that I personally recommend.
But when we open 20EMA and 50EMA to compare
Three trading opportunities occurred during this period
A very rough look shows that there are two profits.
Once was a loss
Sounds like pretty good
But let’s look a little deeper
You will find that the profit and loss ratios of the two trading methods are incomparable.
The money earned in the end was more than doubled.
Do you understand it
Summarize
alright
Let me now summarize what I learned today
Point 1: There is no universal parameter setting for the market
There is only one most appropriate moving average parameter setting
This parameter setting is determined by market conditions.
Point 2: Moving average can be used as a filtering function
Give you an absolutely objective reference factor
Let you know which side of the market is the general trend?
Make sure you can trade with the general trend
Point 3: We learned about the interaction between price and moving averages
The result obtained
It will be better than using trading signals such as golden cross and dead cross.
Our focus should be on the interaction between price and moving averages
It is not very rigid and only depends on when the two moving averages cross above or below.
Because price is the basis of everything
If we get hold of this
There can definitely be a better time to enter the market
To get a better profit-loss ratio
Your chances of success are definitely much greater in the long run!
alright
That’s pretty much it for today’s sharing.
Here you will learn everything about trading
Not only applicable to the currency circle
More suitable for futures, foreign exchange, stock market
With technology in hand, I have the world!
I am a panda coach who is good at making complex problems simpler.
See you next time