Moving Average Trading Secrets (This is What You Must Know...)
Summary
TLDRThis 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
📈 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.
🏁 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.
🕒 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.
🛤️ 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.
🚀 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.
📚 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.
Mindmap
Keywords
💡Moving Average
💡Fast Moving Average
💡Slow Moving Average
💡Relative Strength
💡Mean Reversion
💡Path of Least Resistance
💡Trailing Stop-Loss
💡Price Action
💡Support and Resistance
💡Trading Strategy
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
right do me a favor hit that thumbs up
button and subscribe to my youtube
channel and if you want to learn more
learn more about what I do you can go
down to my website over here ok trading
with Rainier come over here just scroll
down a little bit right and there are a
couple of trading guides here for you
you feel a little more about price
action trading click this orange button
here and I'll you know share with you
more information more knowledge on how
to actually become a better price action
trader how to better time your entries
and exits your market structure
support resistance and much more however
is gonna go and learn more or discover
more about writing trends maybe do
something that you are really you know
resonate with write your own write
long-term trends profit in bull and bear
markets then the ultimate
trend-following guide is for you just
click this orange button and I'll send
it to your email address both of these
guides are completely free so just go
down to my website trading with rainy or
calm right and download it and get your
hands on it and you'll study the
materials so with that's it I have come
towards the end of this video any
feedback or comment just let me know
below subscribe to my youtube channel
hit that thumbs up button and with that
said I'll talk to you soon
you
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