1. One can safely make a statement that moving averages help one easily identify trends or confirm reversals.
2. However a caution is to be exercised following moving averages as it generally has a time lag attached to it.
3. One can derive maximum benefit from this tool in trending market as compared to a sideways market.
4. As a safe strategy one can be long as long as the stock stays above moving average and one can exit position as and when stock cuts the moving average from above.
5. Moving average can be either 20 DMA (grey), 50 DMA (red) and 200 DMA (blue) as depicted in the chart and one will observe that as the number of days in moving average increases; the whipsaws decreases.
2. However a caution is to be exercised following moving averages as it generally has a time lag attached to it.
3. One can derive maximum benefit from this tool in trending market as compared to a sideways market.
4. As a safe strategy one can be long as long as the stock stays above moving average and one can exit position as and when stock cuts the moving average from above.
5. Moving average can be either 20 DMA (grey), 50 DMA (red) and 200 DMA (blue) as depicted in the chart and one will observe that as the number of days in moving average increases; the whipsaws decreases.
Subscribe To Get Free Online Stock Market Technical Analysis Tips in Email Here
