Monday, December 7, 2009


as u know . when U observe on a stock price on mkt depth window u may not judge even where it is heading . to resolve this issue u may concider moving average . it is nothing more than the average of privious prices . it is legging indicator and u can choose the period at your own .you may have heard abt 200DMA, 50DMA ,they are nothing but simple average of 200 days closing prices AND 50 days closing prices .
these moving averages are of different type
simple moving average
exponential moving average
weighted moving average 
so the fluctuated price can be shown in a linear manner . to check the trend for day trade u can place 14 & 42 mins moving average to confirm trend revarsal on a intraday minute chart . for more info on the subject u may go to wikipaedia the treders encyclopaedia,there u will get answer for your all queries
Trading with moving averages, specially intraday trading proved quite profitable so for . you may never loose on any trade if u will follow this strategy . if u are able to see live charts then this method will help u a lot. you have to see only that your selected stock price is trading above or below the moving average . if you are familiar with moving averages ,then u may select a combination of two moving averages ,at the ratio of 1:3 periods . For high volatility you may use higher nos of MA periods like 14 & 42 or 20&60 perIods on intraday 1 min charts .
You only have to go long if price is trading above both MAs and when price starts Moving below MAs then cover your position .
The opposite for short position is true too . if scrip is trading below MAs then choose to short your position.and cover your position when price tends to cross above MAs.
You may use MACD in combinaton wid MAs to gain more accuracy on your trade prediction.

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