With the right trading approach, the 50 period moving average can also be a buy and sell signal indicator and you would need a trigger to get you into a trade (more on that later). Some will say that “all the big players use it” but that is a statement that is very hard to prove. With a quick glance, you can get a quick overview of how the market has performed, the long term trend direction and if the price is range-bound. The 50 day gives us a bigger picture trend view and helps remove the noise from the bars on the charts. Traders will often use the 50-day on the daily charts and the 10-week moving average on the weekly charts. The 50 is a slightly longer-term moving average that tracks the last 10 trading weeks. Why should you use a 50 period moving average? While it is good to know how an indicator gets its information from the various data points, your charting package will do all the calculations for you. Like all simple moving averages, there is nothing magical about the 50 day SMA and here is how to calculate it:Īdd all the closing prices of the last 50 daysĭivide the sum by 50 to get the present-day average Some would say it is one the best tools for day trading due to the amount of traders that consider it when making decisions. The 50-day moving average is one of the more popular technical indicators used in technical analysis.
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