How to use moving average when speculating foreign exchange?
First of all, to use the moving average for analysis, it is necessary to choose the analysis cycle. This will be different because of the interception length of the trend. The foreign exchange trading trend and the average cycle should have a proportional relationship. In the short-term, the long and short trends should be considered. Help details.
Secondly, it is the question of whether you can catch the big trend. This is almost always a question that must be considered in any kind of technical analysis. Whether you can catch this trend is determined by the characteristics of the technical analysis method. On the other hand, it is determined by one’s own foreign exchange trading strategy and thinking.
In the process of using the moving average, you will encounter the problem of determining the top and bottom, but if you combine the trend analysis, everything is easy. To put it simply, the trend is usually along the moving average; the end of the trend and the end of the moving average are often out of sync, and we need to combine the speculation trend to judge here. Generally, it is to consolidate after a new high is made. After a period of downward movement, the moving average will extend upwards. After another rise, the trend will change only after making a double top. Therefore, it is best for investors not to enter the transaction immediately before it is confirmed, to avoid being dragged in by the market and causing unnecessary losses.
How to use moving average when speculating foreign exchange
5-day, 10-day, and 30-day moving average operation strategy
Technical analysis is a necessary process when speculating in foreign exchange. Investors need to use auxiliary lines to judge the trend of K-line when performing technical analysis. The moving average is one of the auxiliary lines. So how to use the moving average when speculating in foreign exchange?
Moving averages, according to different calculation methods, can be commonly divided into ordinary moving averages, exponential moving averages, smoothed moving averages and weighted moving averages. Below, the editor will comprehensively analyze the three most commonly used moving averages on the 5th, 10th, and 30th.
5-day moving average: Because there are 5 trading days a week, whether the 5-day moving average crosses above or below the 10-day moving average is a common reference line for many short-term investors.
10-day moving average: The application of the 10-day moving average is very extensive. It can truly reflect the change and trend of the average cost of exchange rates and can be used as a reference for short-term buying and selling.
30-day moving average: The 30-day moving average is used in conjunction with other averages to allow investors to quickly understand the dynamics of the exchange rate of the day and the short-term and medium- to long-term averages and understand the correlation between them.
- When the exchange rate breaks above the 5-day and 10-day moving averages, it means that the short-term price trend becomes stronger. If it breaks through the 30-day moving average, it can confirm that the market sentiment is developing in a bull direction. You can choose to do more at this time.
- If the exchange rate rises after the golden cross on the three moving averages on the 5th, 10th, and 30th, then the trading volume will gradually increase, and the callback volume should shrink significantly, especially when it breaks the 30-day moving average. Of cooperation.
The three moving averages on the 3.5th, the 10th, and the 30th form the golden cross at the mid-term bottom. The market outlook should have a mid-term uptrend. If the three moving averages form a golden cross in the downtrend, the price will not rise much after buying, but will fall quickly. Breaking the three moving averages and the three moving averages then form a death cross divergence downward, indicating that the previous period was just a rebound. When the price falls below the 30-day moving average, the loss should be stopped.
The above is my personal analysis and usage of foreign exchange moving averages. These experiences are also when I started to speculate in foreign exchange, hoping to be helpful to novice investors in need.