Moving Average K Line flexible use multi-line cross-Law Money Tips

Category: Money tips Release Date: 2006-03-13

A moving average to produce a good trading signals, but there are many shortcomings. If investors use short-term (eg 5) of the moving average line, MA will be very close to the market, crossing will be often, when the market is when the trading range, it can easily generate an error signal, which increases transaction costs, resulting in loss; If investors use the long-term (eg 60 days) moving average line, although the trading range can be achieved to avoid and reduce the wrong signal to the purpose, but had to give up a lot of money (which follow from the trend of the distance from the fact). So, while the use of two or three moving average lines are usually have more advantages.

How to buy and sell signals generated by two moving averages:

When wearing a short-term to long-term moving average and above average when it produced a buy signal, when the short-term moving average crossed over to the long-term averages following a sell signal generated when this method is called "two-line cross-Law," a "two-line cross - Law "lag the market some more, but produce fewer errors in the signal. The stock market the more popular combinations are 5 and 20 day moving average, the futures of the more popular combinations are 5 and 10-day moving average. Investors can also be optimized according to different markets to find the combination is more in line with market movements.

How to generate the sale of three moving average signal:

When wearing a short-term moving average to above average for medium-and long-term buy signal on the rise, when the short-term moving average crossed over to the medium-and long-term averages following a sell signal is generated when the investors in the short term moving average can also be used through the mid-term moving average part of the funds unlocked the cells, waiting for the long-term average for the short-term moving average crossed again when additional positions, or are on short-term moving average, when opening the granary through the long-term moving average, short-term moving average crossing when the medium-term moving average closing out the benefits of doing so is to avoid false signals and protect profits. Currently popular three-lane cross-combination of 5, 10 and 20-day MA, 13, 21 and 34-day MA.

The root with more average investors can make a four-wire or five-line cross-law, but should be noted that not moving average of the number of the more the better.