Moving Averages is a common indicator which most of us (novice/professional) use in the stock market for trading and investment.

This learning thread would be on
"𝙐𝙨𝙚𝙨 𝙤𝙛 𝙈𝙤𝙫𝙞𝙣𝙜 𝘼𝙫𝙚𝙧𝙖𝙜𝙚"

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Basics of the moving average:

It takes average of the price for the duration we want.

So 10 days moving average means an average price of 10 days closing price.

Common types of Moving Average:
Simple, Exponential, Weighted.

Use only one type in your trading setup.

Different uses:

1⃣ Moving Average Crossovers:

Common strategy used by positional traders and investor in finding multibagger or good returns stocks.

Common crossover used is for 50 & 200 Moving Average.

Also, this is called as "𝗚𝗼𝗹𝗱𝗲𝗻 𝗖𝗿𝗼𝘀𝘀𝗼𝘃𝗲𝗿"

In this buy signal is initiated when lower MA (50 EMA) crosses above higher MA (200 EMA).
And exit or sell signal is intiated when lower MA (50 EMA) crosses below higher MA (200 EMA).

Let's see an example:
Pidilite Industries

Buying Price was 56 in 2009 and CMP is 2462 and still there is no selling signal.

44 times Multibagger or 4300% returns.

In lower time frame, it will give more whipsaw and more number of trades.

Setup looks easy, but is not that easy.

Sometimes stock stays in consolidation and it gives frequent buy and sell signal as seen in Airtel.

One way to avoid this noise is to use price action and look for the breakouts and then trade.

2⃣ Support or Resistance

Moving averages can act as support or resistance to stocks.

Let's look at an example where it acted as a support.

In #IEX chart, 100 Days EMA acted as a support multiple times.
Also, a live trade was shared on IEX:

Let's look at an example where it acted as a Resistance.


Stock faced resistance at 100 days EMA and it kept going down after EMA level.

Stock went down from 105 to 20 in two years.
3⃣ Finally Moving Average can be used as a Stoplosses.

~ For a buyer, if price closes below a crucial moving average, then buy position is closed in stocks.

~ For a seller, if price closes above a crucial moving average, then short position is closed in stocks.

I hope everyone got a taste of how moving average can be used.

These are not a universal rules one must follow. One can create their rule or follow someone else rules.

Only important thing is one must follow a fix rule instead of tweaking or changing setup frequently.


More from All

Conscious of the fact that a batallion of "professional" historians & some crazy trolls have begun discrediting me, my work & whatever I said at @IndiaToday conclave with Dr @ShashiTharoor & @sardesairajdeep . Selective screenshots of NCERT books (usual ploy!) to prove falsehood+

Have been used. If such fakery & sleight of hand can be done on social media pity their students who suffer this on a daily basis!
Given below are links of entire books of NCERT :
Class 6:
Class 7:
Class 8:

Anyone can download entire books & see my point proved amply. Class 7 textbook has merely a map in chp 2, pp 16 that just states names of southern dynasties like Rashtrakutas, Pandyas etc. Some hiranyagarbha myth cited to make Rashtrakutas & their brahmin priests appear foolish

On Cholas in same chp they apparently had 400 types of oppressive taxes- of course jizia later was benign! Cholas are disposed off in 3 pages flat. Apparently Mahmud Ghazni was v interested in finding out more about the ppl he conquered & so got Albiruni to write a book (pg 21)+

Bolstering my point of Delhi centricity while all these great kingdoms are disposed off in 2-3 pgs, chp 3 is fully devoted to the "Delhi Sultans" - what their contribution to this country is no one knows, but their tyranny remains unmentioned +

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