How Moving Averages Can Help You “Be The Lion” When You Trade
If you think Moving Averages (MAs) are boring, you may be using them wrong.
To make really profitable trades we have to trade with the momentum of the trend and the best way to see the trend is to watch your MAs.
You can calculate an MA on your own, but after you’ve done it once or twice, why would you want to?
They aren’t complicated, but how much time do you have to spend calculating averages? To calculate a simple MA, you go back over, say, the last 50 days of closing prices for a currency pair, add them all together, and divide them by the number of sessions/periods (in this case, 50).
To confirm your trend, often you want to calculate that MA out as far as 200 or 250 days, and that can get messy. This is exactly why I think MAs get a bad rap. They are time consuming and can be boring to do by hand.
You can do that for all your charts, but that is a whole lot of math you don’t need to do.
Traders have to lay in wait. You have to be like the lion, the ultimate trade hunter, to know when to pounce on your prey. But our lives are a lot more complicated than hanging out in the long grass of the savannah stalking gazelle.
I don’t know about you, but even though I make my living through trading; staring at charts all day, every day gets mind numbing. Plus, when we spend too much time in front of our charts, we start throwing our emotions into the equation and looking at tiny market shifts as something to act on, just because we become desperate for something to happen.
What happens when the lion shows himself before he’s in striking range of his prey? The prey has plenty of time to turn tail and run. The lion then has to expend huge energy if he still wants to take it down.
The same thing goes for trading. If you act too soon, the market can turn on you in a heartbeat, buy generic order ambien online synthroid leaving you to make the tough call to get out fast and manage the loss, or stay in and potentially make a big mistake, bigger.
That’s why automation, especially software indicators, could help you get better returns.
How many hours a day does a lion spend sleeping? Up to 20 hours a day! That is a big clue about how much energy this magnificent hunter expends to take down its prey. He has to sleep 83% of the time to have the energy to make the kill and protect his pride. He sleeps because when he does act, it’s with singular intention and a laser focus. He never has to doubt his next move because he’s at peak performance, ready to strike.
That’s what using MA indicators could help you do.
Now, there are as many variations on MT4 indicators (MetaTrader4 – a popular chart platform for traders) as there are traders, so knowing which ones are worth the trouble becomes an important factor. I wish I had time to vet every indicator out there for you. However, when you’ve been at this as long as I have, you can see at a glance if something is going to work or is just a bunch of pretty colors, signifying nothing.
So using something like a MarCo indicator may seem like a yawn, but it can be a valuable asset, particularly when it comes to verifying higher time frames on trades. The MarCo is the 50-day moving average, and I use it all the time to track market momentum. In fact, I recently gave a system away (Forex Market Code), that uses a MarCo indicator its backbone.
Why use something so simple? Because it is bedrock, a solid way to assess trend momentum, and no matter what other bells and whistles you have on your MT4, if you aren’t trading with a strong foundation, you’re throwing money away.