Using Moving Averages

Moving averages can be a great way to get a handle on what market motions mean as far as where future prices might go. Moving averages come in two varieties: simple and exponential. A simple moving average weights each day separately while exponential moving averages weight the most recent days the heaviest.

These technical indicators appear as a line on a chart and can reveal when trends are about to reverse themselves. When the moving average moves above the closing price of a stock, this can be a good indicator that you should buy. Since this can be an indicator that the price is about to go up, this should only be done when the moving average is sloping upward.

As you can see, this might be a bit late at predicting trends, but it catches them still at an early enough stage that you can ride out many benefits while using the Forex Profit Predictor. When the price closes above the moving average, this means that it is time to close the position and sell the stock in question.

Moving averages are typically used for 30 days of data. This gives a back story to the stock’s current price and can be a good tool at showing just where a stock has been pricewise. The important thing to remember, however, is that there are times when moving averages don’t work. Usually this is when new information or news emerges. A stock’s price history is very limited in what it can do as far as predicting the future can go. Because of this, you should consult fundamental analysis techniques as well.