WEBVTT 00:02.520 --> 00:07.230 In this video, I'm taking a look at how to treat it, exponential moving averages. 00:08.690 --> 00:16.490 So moving averages one of the most common indicators that you will see in technical analysis and a moving 00:16.490 --> 00:19.100 average looks basically like this. 00:19.100 --> 00:22.060 It's a squiggly line that goes up and down. 00:23.140 --> 00:30.220 And what it is, is a mathematical equation that's being figured out for you, it's plotting every time 00:30.220 --> 00:34.600 there's a candlestick formed and then it connects it also it just looks like a line. 00:35.810 --> 00:38.670 And the idea is gives you the trend. 00:38.690 --> 00:39.890 It shows you if. 00:41.310 --> 00:43.820 Perhaps momentum's picking up that type of thing. 00:45.450 --> 00:50.520 So in order to do this, you need to click on indicators and strategies. 00:51.370 --> 00:58.810 And you can type in e m a which moving average exponential, I'm going to put four. 00:59.920 --> 01:05.980 On the chart, for the purposes of this video, I want to go ahead and click these eyeballs. 01:06.910 --> 01:14.080 And on this one, on the INMA exponential moving average, nine period, based on the clothes going 01:14.080 --> 01:16.420 to change the color to blue. 01:17.840 --> 01:24.880 OK, and you can see that the moving average does, in fact, go up and down with the average price 01:25.090 --> 01:28.080 of the clothes at the candlestick, obviously prices are rising here. 01:28.090 --> 01:29.380 So you would expect the nine. 01:30.500 --> 01:32.750 Emma to rise right along with it. 01:34.980 --> 01:44.220 You can also put other moving averages on, so, for example, let's go to this next one, click settings. 01:45.780 --> 01:50.650 Changed color to red, make it a little bit more easy to see, input's will change to 20. 01:51.800 --> 01:54.620 So this would measure. 01:55.940 --> 01:57.920 The last 20 candlesticks. 01:59.670 --> 02:04.590 It's a little slower and therefore it gives you a little bit of a longer term outlook. 02:05.710 --> 02:09.340 Now, there are a multitude of ways to use. 02:10.320 --> 02:12.870 Moving averages, so, for example. 02:14.480 --> 02:22.730 Notice that the 20 seems to be offering selling pressure, and then once the market breaks above it, 02:22.730 --> 02:26.750 it seems to be offering support that's known as dynamic support resistance. 02:26.750 --> 02:28.250 And you'll see it time and time again. 02:30.100 --> 02:36.170 The 20 day in this case, moving average is one that a lot of people pay attention to. 02:37.030 --> 02:38.560 There's also a. 02:39.960 --> 02:45.740 Crossover system, and this is probably one of the oldest trading systems out there. 02:46.800 --> 02:52.770 And what happens is one of these moving averages will cross over the other, you know, obviously the 02:53.160 --> 02:59.790 nine, the faster moving one of the two does the crossing, it drops below the 20. 03:00.330 --> 03:01.500 And that's a cell signal. 03:01.510 --> 03:08.550 And what that tells you is that momentum for the short term is starting to accelerate to the downside 03:08.910 --> 03:11.280 in the longer term kind of goes right along with it. 03:11.780 --> 03:16.050 The idea is that if the faster moving of the two moving averages. 03:17.140 --> 03:23.830 Breaks down below the longer term one, then it is a cell signal, just as this would be a busy signal. 03:25.320 --> 03:32.100 Now, it's entirely up to you whether or not you do it in the classic sense where people would literally 03:32.100 --> 03:36.500 sell, buy and then if it crosses again sell, they were always in the market. 03:37.440 --> 03:41.360 There are some ways that you can filter some of the noise. 03:41.400 --> 03:43.260 So, for example, this cross here. 03:44.770 --> 03:48.850 Some traders wouldn't have taken that until the two moving averages spread further apart. 03:48.880 --> 03:55.200 That shows a divergence, if you will, of speed because the moving averages are relatively flat there. 03:55.210 --> 03:58.060 That shows that the market is not really going anywhere. 03:58.060 --> 04:02.440 But once it did accelerate to the upside, you can see that the moving averages spread out apart. 04:04.820 --> 04:13.490 There are a couple of special moving average crossovers, and I'll go ahead and show you those now in 04:13.490 --> 04:15.680 order to see these, we will need the 50. 04:16.930 --> 04:18.430 They Emma. 04:20.800 --> 04:28.630 OK, go ahead and paint that orange, let's go ahead and put that on, and then this one will need to 04:28.630 --> 04:31.540 be the two hundred make this black. 04:32.790 --> 04:34.290 So this is 200 days. 04:36.670 --> 04:41.140 So they have something known as the Golden Cross and the Death Cross. 04:42.300 --> 04:48.390 The Death Cross is very, very golden cross, as you would expect, would be bullish, and that is a 04:48.390 --> 04:55.050 moving average crossover when the 50 crosses over the 200 daily moving average. 04:55.200 --> 05:00.720 Specifically, it's just this time frame and just these numbers, just as the death cross. 05:01.860 --> 05:09.780 Is 50 crossing below the 200, so if you hear those terms, those are exactly what they mean. 05:09.780 --> 05:12.120 They don't it doesn't happen on the hourly. 05:12.120 --> 05:13.510 It doesn't happen on a weekly. 05:13.530 --> 05:15.240 It only happens on the daily. 05:16.450 --> 05:22.290 The problem with this, of course, is that it is such a high time frame. 05:22.290 --> 05:28.770 They are such large numbers that as you can see, you may get whipped around in this case. 05:29.430 --> 05:35.850 But when it does work, it tends to work for a very long period of time. 05:35.940 --> 05:41.670 You would have gotten in back here and you wouldn't have gotten the exit signal until here. 05:42.300 --> 05:46.350 So pretty long amount of time to get involved. 05:46.930 --> 05:53.250 Quite often what people will do is they'll use something like this to confirm maybe like a breakout 05:53.280 --> 05:57.930 or something, in this case, some type of candlestick formation, which, of course, will cover those 05:57.930 --> 06:04.050 later to validate that type of setup from a longer term perspective. 06:05.610 --> 06:08.970 There are a multitude of. 06:11.230 --> 06:16.840 Different ways you can use this, so let's go ahead and put a couple on this like coin chart. 06:20.380 --> 06:25.060 So this is a daily chart, so let's use a little higher time frame one. 06:27.220 --> 06:28.210 Let's go with 50. 06:30.310 --> 06:31.360 We'll make that red. 06:32.670 --> 06:33.840 Let's go with. 06:37.190 --> 06:47.150 Black on the two hundred on the daily, and this sets up an obvious up and down trend type of situation, 06:47.150 --> 06:49.220 you can see that we got a death cross there. 06:49.580 --> 06:51.460 And certainly that was a selling opportunity. 06:51.470 --> 06:56.860 Again, though, not a big fan of these, just simply because for the most part, they don't work, 06:56.870 --> 06:57.890 to be honest with you. 06:58.190 --> 07:01.960 You get massive gains or you get stopped out with a loss. 07:02.270 --> 07:03.600 It's kind of nowhere in between. 07:04.070 --> 07:10.640 That being said, though, when you look at this, you can see that the 200 day Emma did offer a certain 07:10.640 --> 07:17.480 amount of resistance and then support a lot of traders will simply only buy or sell depending on which 07:17.480 --> 07:24.830 side of the two hundred day Emma Price is, or in this case, we've had the Golden Cross. 07:25.130 --> 07:33.170 So that tells you that the 50 day Yemane is letting you know that shorter term momentum is to the upside. 07:33.170 --> 07:36.480 So then you start to look for buying opportunities. 07:37.220 --> 07:42.650 An example might be to use, you know, like a Fibonacci retracement. 07:43.890 --> 07:49.710 We've broken to the upside, we've come back to the 50 day ima go ahead and put a fib there and you 07:49.710 --> 07:51.570 can see it's right at the 50 percent. 07:51.900 --> 07:53.760 It's between the two moving averages. 07:53.760 --> 07:57.350 Price has been caught and it extends its way higher. 07:57.690 --> 08:02.220 We break significantly below the 50 day M.A on this particular day. 08:02.700 --> 08:07.260 Could give you a little bit of a heads up as to time to get out. 08:08.010 --> 08:14.340 In the next video, we'll take a look at how to trade something called McGeady or moving average convergence 08:14.340 --> 08:15.450 divergence.