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