Using The Triple Moving Average Crossover To Trade Securities
When trying to make a decision on whether to buy or sell a particular security, the triple moving average crossover can often provide partial guidance. As one of the most basic technical indicators, this technical indicator can provide a buy or sell recommendation based on the direction of the crossover, allowing traders to open or close positions accordingly.
What is a Moving Average (MA) A moving average shows the average value of a stock (or other security) over a period of time. Since moving averages are based on past prices, the crossover is based on lagging data. We can create moving averages for short, medium and long periods, the decision is up to the analyst. For this reason, Triple MA Crossovers work well in a clear-trending market, but not so well in sideways markets.
Triple Moving Average Crossovers Defined As a technical indicator, the triple moving average crossover gives the trader an indication of the future direction of that security. It uses a short, medium, and long moving average and the signal is triggered when the short moving average crosses the medium, and the medium moving average crosses the long moving average. For most applications, analysts rely on 4-day, 9-day and 18-day moving averages for this indicator.
In this case, the 4-day would cross the 9-day and the 9-day would cross the 18-day. Since all three cross, a technical indicator is triggered and the investor is advised to make a trade.
Trade Signals From the Triple Moving Average Crossover Quite simply, a bullish signal is triggered when the three moving averages cross an upward sloping trendline, and a bearish signal is triggered when the averages cross a downward sloping trendline. When the crossover occurs, or is about to occur, the analyst will make a firm recommendation or a conditional recommendation to buy or sell.
When it comes to making trade decisions based on technical indicators, the triple moving average crossover should rarely be used in isolation. Other indicators that can support or refute a signal given by the triple moving average crossover are the Moving Average Convergence-Divergence (MACD) and Momentum.
Alternately, specific trading software can compute thousands of technical analysis signals on a daily basis and spit out a simple buy or sell recommendation. - 23229
What is a Moving Average (MA) A moving average shows the average value of a stock (or other security) over a period of time. Since moving averages are based on past prices, the crossover is based on lagging data. We can create moving averages for short, medium and long periods, the decision is up to the analyst. For this reason, Triple MA Crossovers work well in a clear-trending market, but not so well in sideways markets.
Triple Moving Average Crossovers Defined As a technical indicator, the triple moving average crossover gives the trader an indication of the future direction of that security. It uses a short, medium, and long moving average and the signal is triggered when the short moving average crosses the medium, and the medium moving average crosses the long moving average. For most applications, analysts rely on 4-day, 9-day and 18-day moving averages for this indicator.
In this case, the 4-day would cross the 9-day and the 9-day would cross the 18-day. Since all three cross, a technical indicator is triggered and the investor is advised to make a trade.
Trade Signals From the Triple Moving Average Crossover Quite simply, a bullish signal is triggered when the three moving averages cross an upward sloping trendline, and a bearish signal is triggered when the averages cross a downward sloping trendline. When the crossover occurs, or is about to occur, the analyst will make a firm recommendation or a conditional recommendation to buy or sell.
When it comes to making trade decisions based on technical indicators, the triple moving average crossover should rarely be used in isolation. Other indicators that can support or refute a signal given by the triple moving average crossover are the Moving Average Convergence-Divergence (MACD) and Momentum.
Alternately, specific trading software can compute thousands of technical analysis signals on a daily basis and spit out a simple buy or sell recommendation. - 23229
About the Author:
Chris Blanchet is a technical analysis and options contributor to the online trading reviews site, Online Trader Today.com, where you can obtain a free e-book on Option Sensitivitiesl. As well, he maintains a Debt-Free Blog at How To Repay Debt.com.
posted by X - Men @ 2:24 AM
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