Using Two Moving Averages As an alternative, to try and overcome the disadvantages of a single moving average you might look at a system using two moving averages to generate trading signals. This is another commonly used system, and is called the double crossover method. It’s similar to the single moving average system, but instead […]

Using One Moving Average Using one moving average is one of the most fundamental and common basic approaches available for trading. Even with just one, there are still various ways that you can apply it, both for trading signals and to establish a context for other trading systems. It can be as simple as assuming […]

How To Use Moving Averages Moving averages (MAs) are a very versatile indicator that can make trading a lot easier. Let’s briefly discuss what they are and then have a look at the practical applications of them…. httpv://www.youtube.com/watch?v=64iKhNx6FtU Moving Averages What Price? So the Simple Moving Average, Weighted Moving Average, Exponential Moving Average and others […]

Moving Averages A moving average is a line drawn on a stock chart representing the average price of a stock over a given period. They smooth out the gyrations in the stock price so that the trend becomes more obvious The most common types of moving averages are the SMA (Simple Moving Average) and the […]

Module 6 – Moving Averages Starting out in financial markets can leave a lot to learn, but moving averages are one of the first methods of assessment new traders pick up, because of the relative simplicity of the system. Introduction The moving average is one of the most widely used indicators in the realm of […]

Summary Volume should increase in the direction of the current trend, for it to be sustained Volume often precedes price, so a reducing volume in an uptrend may precede a reversal Divergences between volume indicators and the price chart suggest trouble Increasing open interest in an uptrend or down trend supports the trend Falling open […]

Gaps As a final comment on price patterns, I now want to discuss price gaps. I left this topic over from the previous module as it was getting so long. Gaps, as you might expect, are spaces in the price chart where no trading has taken place. All the trading in one day has taken […]

Reversal Days Sometimes called blowoffs and selling climaxes, these are dramatic market actions. The two terms are opposites. Blowoffs happen at market tops, and selling climaxes occur at bottoms. Take a look at the Light Sweet Oil chart again–   A blowoff occurs when the price shoots up with increased volume, but the open interest […]

Options and Commitments of Traders Report   Options Though I’ve talked mainly about futures when discussing open interest, you can have open interest figures when trading options. They are not quite the same, as contracts in futures markets are a commitment, and open interest measures that commitment; with options, contracts can expire without being exercised […]

Other Indications So, instead of looking at price movements as the only significant movements on a chart, we can also look at volume and open interest and try to apply this additional information to interpret the mood of the market participants which is driving their actions. It is always useful to remember that the markets […]