Moving Average Trading Secrets (This is What You Must Know...)

Summary

This video script delves into the intricacies of trading with moving averages, debunking the myth that they are lagging indicators and offering a fresh perspective. The speaker shares strategies for identifying strong market trends, timing entries effectively, and following the path of least resistance. They emphasize the importance of understanding market structure over relying solely on moving averages, and provide insights on trailing stop-loss techniques for various trend durations. The script concludes with resources for further learning on price action and trend-following.

Takeaways

• 📈 The speaker initially struggled with using moving averages for trading, finding them lagging and unhelpful, but later realized their value with more experience.
• 🚀 Moving averages can identify the strongest market to trade by comparing the relative strength of different markets using the 50-period moving average as a reference.
• ⏰ Timing entries is crucial; the speaker suggests using moving averages to find areas of value, avoiding entering trades when the market is far from these values.
• 🛣️ The 200-period moving average can help identify the path of least resistance, indicating whether the long-term trend is bullish or bearish.
• 🔄 Traders should prioritize market structure and price action over moving averages, as the latter can sometimes lag behind actual market movements.
• 🔄 Moving averages can be used to trail stop-losses effectively, allowing traders to ride trends and protect profits without being shaken out by retracements.
• 🚦 The choice of moving average period (e.g., 20, 50, 200) depends on the trader's goals and the type of trend they aim to capture, with no one-size-fits-all solution.
• 📊 Moving averages are not standalone tools; they should be used in conjunction with other analysis methods to make informed trading decisions.
• 📉 The speaker emphasizes the importance of understanding the core concept behind indicators like moving averages, rather than blindly following strategies.
• 🤑 Traders should be patient and wait for the market to come to an area of value before entering trades, rather than chasing breakouts that may lead to poor risk-reward setups.
• 📚 The speaker offers free trading guides for those interested in learning more about price action trading and trend following, available on their website.

Q & A

What is the initial misconception the speaker had about moving averages?

The speaker initially thought that moving averages were useless and lagging because they couldn't find success using the fast moving average crossing above the slow moving average as a buy signal and vice versa for selling.

What is the first trading secret shared by the speaker about moving averages?

The first trading secret shared is using moving averages to identify the strongest market to trade by comparing the relative strength of different markets using the position of the price relative to the moving average.

How does the speaker suggest using moving averages to time entries better?

The speaker suggests waiting for the market to come near the moving average, particularly the 50-period moving average, as a more favorable entry point instead of chasing the market during breakouts.

What is the concept of 'path of least resistance' in trading as explained in the script?

The 'path of least resistance' refers to trading in the direction of the long-term trend, which can be identified using a 200-period moving average. The speaker recommends shorting if the price is below the 200 MA and buying if it's above.

How does the speaker recommend using moving averages to trail stop-losses?

The speaker recommends using moving averages, such as the 50-period or 200-period, to trail stop-losses and ride trends. The choice of which moving average to use depends on the trader's goals and the type of trend they want to capture.

What is the difference between using a 20-period moving average versus a 200-period moving average for trailing stop-losses?

A 20-period moving average results in smaller drawdowns but can lead to being stopped out of a trend earlier, while a 200-period moving average allows staying in the trend longer but can result in deeper drawdowns.

Why does the speaker emphasize the importance of understanding how moving averages work before applying strategies?

Understanding how moving averages work is crucial because it provides the core concept behind the indicator, allowing traders to use it more effectively rather than blindly applying strategies without grasping the underlying logic.

What is the significance of the 50-period moving average in the speaker's trading strategy?

The 50-period moving average is significant because it helps in identifying the strength of a market and serves as an area of value for better timing entries. It's also used for trailing stop-losses to ride trends.

How does the speaker address the limitations of moving averages?

The speaker acknowledges that no indicator, including moving averages, works perfectly. They advise that when there's a conflict between moving averages and market structure, they prioritize market structure because moving averages are lagging indicators.

What resources does the speaker offer for those interested in learning more about trading strategies?

The speaker offers free trading guides on their website, 'trading with Rainier,' covering topics like price action trading, timing entries and exits, and trend-following for both short-term and long-term trends.

Outlines

00:00

📈 Introduction to Moving Averages and Trading Insights

The speaker begins by sharing their early experiences with trading, highlighting the moving average as an initial indicator they learned about. They initially struggled with using the moving average crossover strategy, leading to the conclusion that moving averages were lagging and useless. However, with more experience, they realized that moving averages have value beyond the crossover strategy. The speaker then introduces several 'moving average trading secrets' they've learned, including identifying strong markets, timing entries, trading with the path of least resistance, and capturing massive trends. They emphasize the importance of understanding how indicators work before applying them to trading strategies.

05:01

🏁 Utilizing Moving Averages for Market Strength Identification

This paragraph delves into the concept of using moving averages to determine the relative strength of markets. The speaker illustrates how to compare different markets by observing their positions relative to a moving average, such as the 50-period moving average. Markets that are stronger and likely to maintain their moves are typically above this average. The speaker provides examples using currency pairs to demonstrate how to choose between trading opportunities based on their relative strength, as indicated by their position to the moving average.

10:02

🕒 Timing Entries with Moving Averages

The speaker discusses the importance of timing entries in trading and how moving averages can be used to identify favorable entry points. They explain that markets which have moved significantly away from a moving average, such as the 50-period moving average, are likely to retrace or mean-revert towards it, providing a better entry opportunity. The speaker uses examples like Palladium and the Dollar to Indian Rupee to demonstrate this concept, advising against chasing the market during breakouts and instead waiting for a pullback to a more favorable entry area.

15:03

🛤️ Trading Along the Path of Least Resistance with Moving Averages

Here, the speaker introduces the concept of trading along the path of least resistance, using the 200-period moving average as a guide to identify long-term trends. They explain that if the price is below this average, it indicates a potential shorting opportunity, while if it's above, it suggests a buying opportunity. The speaker also acknowledges that moving averages are lagging indicators and that there can be conflicts with price action. They emphasize the importance of giving precedence to market structure over moving averages when conflicts arise.

20:05

🚀 Trailing Stop-Loss with Moving Averages to Ride Trends

The speaker shares how moving averages can be used to trail stop-loss orders, allowing traders to ride trends effectively. They provide examples of using different moving averages, such as the 50, 200, and 20-period, to trail stop-losses and the implications of each choice. The speaker points out that while shorter-term moving averages result in earlier exits and smaller profits, they also lead to less drawdown. Conversely, longer-term moving averages allow traders to stay in trends for a more extended period, capturing larger profits but also risking more significant drawdowns.

25:07

📚 Conclusion and Additional Resources

In the concluding paragraph, the speaker summarizes the key points discussed in the video, including identifying market strength, timing entries, trading with the path of least resistance, and trailing stop-loss strategies using moving averages. They encourage viewers to like, subscribe, and visit their website for additional trading guides on price action trading, market structure, support and resistance, and more. The speaker offers free resources to help viewers improve their trading skills and understanding of market trends.

Keywords

💡Moving Average

Moving Average is a widely used indicator in trading that helps to smooth out price data to provide a clearer picture of the trend direction. In the video, it is explained as a tool that summarizes past prices by averaging them over a set number of periods. The speaker discusses how they initially thought moving averages were useless due to a simplistic understanding, but later realized their value in identifying trends and market strength.

💡Fast Moving Average

The Fast Moving Average refers to a shorter-term moving average that is more responsive to recent price changes. It is typically used in conjunction with a slower moving average to generate trading signals. The video script mentions using the crossover of the fast moving average above the slow moving average as a buy signal.

💡Slow Moving Average

The Slow Moving Average is a longer-term moving average that is less sensitive to short-term price fluctuations. It provides a broader view of the market trend. In the context of the video, the speaker initially used the crossover below the slow moving average as a sell signal but later expanded their understanding of its applications.

💡Relative Strength

Relative Strength is a concept used to compare the performance of two markets to determine which is the stronger or weaker. The video explains using the relative position of two currency pairs to a moving average to identify which one is showing more strength and thus might be a better trading candidate.

💡Mean Reversion

Mean Reversion is a theory in finance that suggests that asset prices will tend to revert to their long-term average. In the video, the speaker advises waiting for the market to pull back towards the moving average, which is seen as an area of value, before entering a trade to minimize risk and maximize the potential for a favorable move.

💡Path of Least Resistance

The Path of Least Resistance is a trading concept that suggests trades should be taken in the direction of the dominant trend, which requires the least effort to continue. The video uses the 200-period moving average as a guide to identify the prevailing trend and to trade in harmony with it.

💡Trailing Stop-Loss

A Trailing Stop-Loss is an order placed at a certain amount of profit to secure gains if the market moves against the trader. The video explains how to use moving averages to dynamically adjust the stop-loss as the market moves in the trader's favor, allowing for larger gains while still protecting profits.

💡Price Action

Price Action refers to the study of price movements to anticipate future market direction. It is a fundamental aspect of technical analysis. The speaker in the video emphasizes the importance of price action over moving averages, suggesting that the structure of the market should be the primary consideration when trading.

💡Support and Resistance

Support and Resistance are levels on a price chart where the price tends to stop and reverse. Support is a price level where the asset is expected to find support as it dips, while resistance is a price level where the asset is expected to find resistance as it rises. The video discusses using these levels in conjunction with moving averages to identify good entry and exit points for trades.

💡Trading Strategy

A Trading Strategy is a fixed plan that defines the conditions under which a trade is made. The video script outlines various strategies involving moving averages, such as crossover strategies, mean reversion strategies, and trend-following strategies, each with its own set of rules and parameters for entry and exit.

Highlights

The trader initially struggled with using moving averages for trading, finding them lagging and unhelpful for a time.

Moving averages can identify the strongest market to trade by observing which market breaks out first and tends to last longer.

Traders can use the 50-period moving average to determine the relative strength of different markets.

The concept of using moving averages for entry timing suggests waiting for the market to retest the moving average for a more favorable entry point.

Palladium's historical tendency to mean revert towards the 50-period moving average is highlighted as an example of better entry timing.

The 200-period moving average serves as a guideline to identify the path of least resistance and the long-term trend direction.

In conflict between moving averages and market structure, the speaker prioritizes market structure for trading decisions.

Using moving averages to trail stop-loss can help ride significant trends and protect profits.

Different moving average periods can be chosen based on the trader's goals for capturing short-term, medium-term, or long-term trends.

The trader emphasizes the importance of understanding the core concepts behind trading indicators rather than relying solely on technical techniques.

A comparison is made between the utility of a Ferrari versus a Toyota Vios to illustrate the different uses and strengths of trading tools, including moving averages.

The transcript describes how to use moving averages to identify strong market candidates like the New Zealand yen compared to the Aussie yen.

The importance of not chasing the market at high levels is stressed, advocating for patience and waiting for a pullback to a mean reversion area.

The transcript provides a guide on using moving averages for identifying support and resistance areas for better trade location decisions.

The speaker shares personal trading secrets and insights learned over the years about using moving averages effectively in trading.

A disclaimer is made that no indicator works perfectly all the time, including moving averages, and that discretion is needed in trading decisions.

Transcripts

so in my early days of trading I was

like a lost wandering soul right around

you know trading forums blogs and

websites trying to learn more about

trading so naturally right one of the

first few indicators that I came across

is moving average okay and moving

average I was taught there you know to

use this indicator properly properly

right I should wait for the fast moving

average to cross above the slow moving

average and that's when I buy right and

when the fast moving average crosses

below the slow moving average that's

when I sell so it looks something like

this right let's say this is the slow

moving average and let's say this is the

fast moving average so when the fast

crosses above the slow you buy okay so I

tried this and well I lost money

couldn't find success with it right and

and I decided to conclude that moving

average is lagging it's useless okay so

that was the conclusion that I hid for a

few years but then s I'm not sure that's

a trader right yes I know I learn more

and I look back then I realized hey

moving average is not as useless as it

seems right I was too naive and no I

came up with such a simple conclusion

based on the fill moving average

crossover strategy so let me explain

right let's say for example you you are

you know give witness a carries a

Ferrari against a Toyota Toyota obvious

so when they go and race together

naturally we can agree right then the

Ferrari is gonna beat the Toyota videos

hands-down right it's stronger

horsepower bigger engine strong a bigger

cc and stuff like that but how you gonna

conclude that that toyota vios is a

useless car well no it really depends on

how you look at it because a toyota vios

you can fetch like a family of five or

six people a Ferrari can do that

a toyota vios is a more fuel economy you

have received more money on fuel in the

long run so you can see that to your top

videos even though you can't beat the

Ferrari head on right it is not useless

there are other uses to it and this is

the same as moving average right this is

the same concept I'm trying to bring

across it's just because the moving

average crossover doesn't work it

doesn't mean that this indicator is

useless

right because in today's video I'm going

to share with you right moving every

trading secrets right that I've learned

right over the last few years of trading

number one all right I'm gonna share

with you how you can actually identify

right the strongest market to trade

right to buy the strongest and shot the

weakest number two I'll share with you

how to better time your entries right

with moving every so you enter your

traits when the market is just about to

move in your favor something I'm going

to share with you how to actually no

trade along the path of least resistance

so we can increase the probability of

your winning trade and finally we will

talk about how you can use moving

average to right massive trends in the

market so there's a lot we're gonna

cover in today's video

so let's begin but first right hey if

you're watching this video your first

time is you're ten time doesn't matter

hit that thumbs up button below and

subscribe to my youtube channel this way

you always be up-to-date I whenever I

publish a new video just like this one

you're watching right now so go ahead

take one second and do it right one

right and let's begin so first thing

first right before we talk about the

specific strategies on moving average

alright I want to share with you know

and explain to you how moving average

works right because if you don't

understand how an indicator works right

whatever strategies whatever techniques

or techniques that you use in future

right it's gonna be doing it in a blind

manner without really understanding the

core idea or concept behind this

indicator so let me spend just a few

minutes explaining what moving average

is and how the line goes up and down so

moving average is simply food right is

just a it's a indicator that takes the

past prices and kind of summarize it so

let's say you know historically let's

say we talked about five period moving

average and a price go something like

you know one two three four five right

let's say this are the prices on on your

chart right

one dollar two dollar three four five so

what the five period moving average is

going to do is going to take the total

value of the prices and be back by five

because it's a five period moving

average so the total value of this is

let's say 1 plus 2 is 3 6 10 15 so 15

right divided by 5 because our there are

five values right because it's a five

period moving average the moving average

does gonna appear on your chart is the

value of 3

okay now let's say you know another

number forms up let's say now this time

around the number is a 10 okay

so again it's gonna take the last five

numbers which is number ten number five

four three and two so you add up this

section over here so you get 19 22 and

24 so 24 right 24 divided by five

okay you're gonna get a value of 4.8

okay so you're moving average to appear

a value of 4.8 so this is the core idea

behind moving average is simply ticks

right the past prices and divide it

right according to whichever moving

average parameter that you've chosen so

in this case this is a five period

moving average if you take a three

period moving average is just going to

look at the last three numbers and then

divide by three and etc okay so that's

how moving average the values are being

derived so of course right there are

different ways moving average of being

calculated we have exponential simple

moving average weighted moving average

just some slight nuances right behind

the video being calculated but the core

concept is pretty much what I've just

shared with you okay now that you

understand right moving average how it

works why the number moves up and down

let's look at the first secret about

moving everything that I want to share

with you the first thing that I want to

talk about is using moving average right

to find the strongest market to three or

the weakness market to shop so here's

the thing right about markets is that

usually if you notice right a market the

first market that breaks out first okay

that tends to be the stronger markets

and you can expect the move to last

longer so this is a concept that we call

a relative strength identifying who

actually know the stronger ones and what

a weaker ones so let's say for example

right right now this is the chatter of

dollar sing so how you can do it is just

pull up a moving average for example

this one we're gonna use is the 50

period moving average okay and you

notice right that this market is

actually in somewhat of a ascending

triangle okay notice the higher lows

into this area of resistance and notice

that right now the price is somewhat

below the 50 period moving average so

let's say you are deciding between

dollars sing and dollar against the

Chinese yen you can decide which market

to long

let me just pull out the dollar against

the Chinese yen and you notice that

dollar against the Chinese yen is

similar to the price section s dollar

thing as you've seen earlier another

ascending triangle but this time round

right notice that the price is actually

above the 50 period moving average

where's the dollar sing one that you've

seen earlier okay let me just see if I

can find it here just add a symbol or so

we can just track easily

all right the dollar thing that you've

seen earlier the price is actually below

it whereas the dollar against the

Chinese yen the price is this is bad

okay dollar against the Chinese yen the

price is above it right so what this

tells you is that if you are deciding

between two by a dollar against the

Chinese yen or the dollar against the

thing you want to be going with a dollar

against the Chinese even because it's

showing you sign of strength it's

stronger than the dollar thing because

the price current is still above the 50

ma whereas dollar Seng the price is

below it so this is a sign of strength

and it there's a good chance if the

dollar

you ain't breaks out right the move will

be stronger and your lasts longer

compared to dollar single okay so this

is one way you can use relative strength

to help you identify which are the

stronger markets to trade right and to

kind of know avoid the weaker ones so

another example to share with you right

is let's see hmm

let's look for Aussie yen right same

concept just wanna you know explain it

more in depth so Aussie and let's say

for whatever reason let's say you are

bullish on this market maybe the price

has you know broke above this swing high

and right this also small range prices

break out of it right now it's

consolidate consolidating anything that

the market has room to move higher okay

so this is the Aussie against the

Japanese yen and now you at the same

time you notice that there's another

market with similar price action right

it's the New Zealand yen and you

somewhat can decide know which one to

buy sure you buy the new zealand yen or

the aussie yen so this time wrong right

if you notice both of this market they

are all above the 50 period moving

average so not a technique that you can

use another variation of it is to look

at where the price is

relative to the moving average both of

them are above the 50 mm but if you pay

attention to the New Zealand yen is it

has a much wider distance away from the

50 ma showing you a sign of strength

because the market is strong that's why

it is a further away from the moving

average right notice there is a quite a

distance over here where as you compare

with the Aussie yen it's much closer

towards the 50 period moving average so

it's this tells you that you know the

New Zealand New Zealand yen likely is a

stronger candidate and if you are

bullish on the market you want to be

buying the New Zealand yen

okay so this is how you can actually use

relative strength in your trading to

identify the strong markets and even the

weak markets the concept is just the

opposite so moving on right I want to

share with you a technique right now how

to actually no better time your entries

you don't want to be you know entering

too late so this is a very powerful

technique okay to share with you so if

you look at our Palladium just remove

these lines first okay so this case we

are using the 50 ma as well so if you

look back right palladium historically

this market it tends to respect the 50

period moving average right this is the

area of value on the chart now it's

quite obviously tested once twice three

fours break over here 4 5 etc so you

look back just eyeballing right you know

that this market right it tends to mean

River towards the 50 period moving

average so from a logical perspective if

you look at this market right now right

let's say you know often market is

bullish many traders would think oh you

know market is breaking out let's buy

right it's bullish let's buy you want to

pause and think for a moment why is that

that's because if you look at this price

section of this market historically it

tends to mean revert back towards the 50

period moving average okay so if you

were to buy over here there's a good

chance that this market could mean

revert back towards the moving average

and you would have to end or that

drawdown or you might even get stopped

up off your trade if your stop-loss is

too tight so from a risk to reward

standpoint right a much better time to

enter your trades is when the market is

near

the 50 period moving average so in this

case your is a matter of you know being

patient and let the price come to you

and in this case right it did come to

you right and this is a much more

favorable trade location to enter your

trade right entering from an area of

value okay so this is a very good

example palladium on you know on trying

to you know better time your entries and

not just blindly chase the market

because there is a big break out so one

more example about dollar gains the

Indian rupee so I'm just using a 50 ma

here but again you can meet thirty or

forty it doesn't really matter that the

concept is really what matters okay so

dollar gets the Indian rupee similar

story okay you can notice that the

market again pretty much you know making

highest highs over here again at this

point you don't want to be buying at

this price level even though it did mean

higher right so at this point again

you'd want to be chasing the market up

at this highs

okay a much more favorable trade

location is to wait for the market to

retest closely towards the fifty period

moving average in this case you can tell

that they don't know we did miss the

move right the market continued higher

right and imagine it now it break down

okay but the idea here is still let you

know in the long run right you really

want to be trading where the price is

close to the moving average as close as

possible if not right you would see that

often market makes a huge move right a

huge stretch away from the moving

average then it's net back right and you

get stopped out of your treats so just

share with you another example right or

didn't print crude oils it's a good one

okay so right now again if you look at

this right for our time frame notice

that this market again tends to come

somewhat close towards the fifty period

moving average so again you don't want

to be chasing the market over here over

here right the prices you know so far

away from the 50 period moving every

state wait for a pullback get a more

favorable trade location a more

favorable trade location somewhere here

so don't just chase the market look at

where it is right relative to its a mean

reversion area on a chart if the 50 ma

is a good mean reversion area you want

to pay attention to the 50

me sometimes it might be the 30 or 40 it

doesn't really matter the concept is

what method so you want to identify the

area of value on a chart and you know

try to trip as close as possible to it

the beauty of it is that if you can

train as close as possible let's say as

close as possible towards the area of

value let's say somewhere here right you

enter your trait somewhere here

your spot loss can be tighter I just say

just a distance above this moving

average a much tighter stop-loss combat

do you know chasing a market going shot

over here your stop-loss mouse you know

so wide okay so it is up again right

creating from an area value you have a

more favorable risk to reward on your

trade plus right you don't really have

to end other kind of draw down when the

pullback comes so that's another thing

that I wanna share with you with moving

average I help you identify the area of

value and to better time your entries

moving on right the third thing that I

want to share with you it's how to use

moving average to identify the path of

least resistance otherwise known as the

Train so very simple right just again

let's have a look at example okay so

this is a euro dollar right so when I

every time look at the trend I like to

use the 200 ma to kind of see right

where the long-term trend is so if you

look at this 200 ma right this black

line over here notice that the price is

below the 200 ma so often if you've seen

my videos I always say that if the price

is below the 200 ma all right look for

shot setups meaning you want to look for

opportunities to shut the market if the

price is above the 200 ma then look for

opportunities to buy okay so in this

case if you pay attention right the the

price right now is below that 200 MA

okay so opportunities to shorten in this

market possibly the market retesting

back this are swinging high over here

right there would be opportunity to shop

also you have the confluence of the 200

period moving average so again right

this would help you trade along a path

of least resistance right any will

actually you know increase the

probability of your traits right because

you're now trading with the trend okay

so the 200 ma is a very useful guideline

to know know whether you should be long

or short so another example let's say we

look at a pound dollar

I'm just gonna pick this out Kansai

baguette is the same right if you look

at this right the market right now it's

a pretty much below the 200 Emmy so what

should you be doing right you wanna be

shorting the market you wanna be selling

so again where do you sell again

possible area of values at this swing

high over here market could retest up

higher right get a price rejection on

something and then market hits lower

okay so this is a very simple a

barometer a guideline to know which is

the direction that you should be trading

however I also want to share with you

that there there are times where it's a

not very obvious okay

so just wanna know B I just really want

to be honest right and can I know let me

know that no indicator is it works

perfectly there's always pros and cons

to it

even the 50 ma that I said earlier right

if you wait for an area of value the

price might move further in your favor

and your knowing the trade that could

happen as well and same thing right for

the 200 I mean there are times where you

know if you look at the price section of

the market right let's say look at the

daily timeframe okay right now okay I

forgot to mention right whenever

whenever I use the 200 ami right I like

to plot it on the on the daily timeframe

right I don't know where the indicator

disappeared too right so let me just get

it out okay I like to reference it on

the daily timeframe

let me just pull it at 200 change this

to black okay so yeah right now you can

see that the price right now it's a

below the 200 ma on the daily timeframe

so what I'll do is again by right right

since I said that if the price is below

it you wanna shot however if you think

about this right right now if you where

you want a shot if that the price comes

above into this uh swing high the market

now is back above the 200 Emmy so you

should be long so now you might face

this issue of you know kind of like you

know a confusion a conflict right you're

trading from an area of value but it's

trading against the long term moving

average so what now so if you ask me

right I would always give more weights

right to market price structure that

comes first because moving average after

all is a lagging indicator that's what

I've just shared with you right the way

they are being complete that elects the

market so whenever there is always a

disc on

between price action and moving average

I go with market structure I go with

price action so with that said right

from a price action perspective you can

also see that you know this is an area

of support okay and this is the area of

a resistance so now yes right the price

is below that 200 ma on the daily

timeframe by right you should be shot

but if the price were to come into this

area of support right I'm not gonna shot

just because the price is below the 200

Emmy right this is where you know you

have to use a bit of discretion and to

know I know what comes first right for

me price action always comes first so in

this case if the price comes into this

area of support right I want to be

buying even though the price is below

the 200 ma so as I've said right that

200 ma is just a guideline relief for

those of you who are new to trading you

do not know how to analyze the market

you can pay attention to the 200 Emmy as

a rough guideline but bear in mind right

you will face scenarios like this as

what I've just shared with you right

where you have to make a choice are you

going to pay attention to the moving

average or the market structure and for

me I always go with the market structure

okay so this is a very important thing

to to note

all right and briefly let's just you

know go back to euro dollar because I

think we're on the forward timeframe

earlier right euro dollar okay you can

see you get the concept is the same this

one round this time around is more

clear-cut daily prices below the 200 ma

on the daily timeframe so again an area

of value on the daily timeframe is

somewhere here right somewhere towards

this area of resistance which is has the

nice confluence of the resistance plus

this 200 ma alright so this is where I

get my bias right because I trade a lot

of the daily timeframe in a forward

timeframe so I always pay attention to

where the trend is on a daily timeframe

and then from then on right I would base

my trading decisions but bear in mind

right as I've said earlier there is a

very high possibility where you will

face a conflict between market structure

and the moving average and for me always

I go with market structure because

moving average it tends to like the

market so the final tip right that I

have for you for moving average is this

it's a how you can actually use the

right to trail your stop-loss very

powerful and it's very simple

just remove these lines all right let's

say for whatever reason you look back at

this chat historically and market did

break out here

okay then inform someone of a a trend

continuation or blue flag pattern

marking them broke up higher and you

know pretty much you know made quite a

huge move so how could you have you know

right in the Train so in this case right

you can actually use moving average to

help you Trillian stop-loss to ride the

train so one ways you can use the 50

period moving average this blue line

here notice that the market the price

only breaks and close at this level over

here okay so this misra if you were to

trill with the 50 ma you would have

redone the move up higher and exit only

somewhere about here so that's a pretty

huge move alternatively right some of

you you know might choose to be more

more longer-term right you can even

trail with for 200 ami so let me just

remove 250 trill for 200 ma which is

this black line over here and you can

see that you would have stayed in a

trade longer and exit when the price

breaks and close over here

okay so alternatively some of you might

choose to go with a shorter term moving

average likely 20-period moving average

let me just change this to 20 right just

remove the black one first okay so in

this case for the 20 I mean you would

have exited the trade earlier right with

a smaller profit here so at this point

right some of you might be thinking all

right now so you know I guess I should

go with the 50 or even a 200 ma because

you know I get to write longer-term

train well the answer is a yes and no

okay it really depends on your training

goals because in this example even

though the 20 ma you have a smaller

profit right okay

your drawdown is lesser because you give

back less open profits whereas the 200

ma right the longer term moving average

you would actually you know respect

giving even more profits however the

upside to the longer term moving average

is that you get to catch a longer-term

trend you don't get shake up too easily

so this really pros and cons to you know

whether you want to use a shorter term

moving average or a longer term moving

average there is no best approach right

it really depends on a type of trends

that you want to capture so as a rough

guideline

you've gotta capture something

short-term trend right 20ma it's a it's

a pretty much a good parameter to use if

you want to capture a medium term trend

right anywhere between fifty two hundred

ma it's pretty good to use and if you

want to write long term trend right 200

MA

it's a it's a good one to use as I

mention right no best approach right

this one the good thing about shot at

the moving average is that your draw

downs on shorter however you tend to get

sick out of a trend earlier okay meaning

you get stopped out on the retracement

longer term moving average and the

beauty of it is that you stay in the

trend longer you don't get shipped out

as easily but you have to end your a

deeper and longer drawdown so this is a

fact okay this is how you trail your

stop-loss right there is no magical

parameter traders like to uh say right

now which the best number as doing is

something that that books all the time

nope there is a so focus on the concept

something that I've been saying quite a

number of times in this video all right

that is really what's important in

trading the concept so with that said

let's do a quick recap right to what we

have learnt today first thing first I

talked about how to actually identify

the strongest market to trade right by

using a concept called relative strength

okay just give me a moment concept

called relative strength second thing I

talk about is how it's actually better

time your entries right I say that you

can use the moving average as a

guideline to help you identify an area

of value so if the price is very far

away from the area of value you'd want

to be entering your traits at that point

in time because the market is likely to

pull back or even reverse and Entering

when the market has you know break up so

much higher right really increases your

risk so that's a very poor entry

location now 13 right how to identify

the path of least resistance right what

I I recommend is that you can use the

200ma to help you identify the long term

trend right just overlaid on the daily

timeframe to know know where they should

be long or short

however right I also mentioned it there

are times right where you are come into

conflict with price action market

structure for me personally I always pay

more attention I give more weight age to

price section and market structure

and finally I spoke about how you can

actually go about using moving average

to write massive trends ha there's no

best moping every try it really depends

on the type of trends that you in a

capture with is it short term medium

term or long term trends okay

so with that said right I hope you've

got a ton of value out of this video

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