Indicators are not always what they appear to be. Moving Averages are widely used as a trend-following tool. In many of the trading strategies that we have developed over the years, the 200-day moving average is used to identify the direction of the trend. We have found that taking buy signals only when the price is above the 200-day MA can improve profitability in many systems.
Recently, we completed research that shows moving averages can also be used as part of a strategy to find short-term, mean reversion trading opportunities. This may be surprising to some traders because it might seem odd to use a trend-following indicator like MAs in a short-term, mean reversion strategy.
————————————————————————————————————————————
If you would like to continue reading this chapter please click here to request a free sample now.
If after you have finished reading the first chapter of Trading Stocks and Options with Moving Averages – A Quantified Approach, you would like to download a copy please click here.
Best of all Trading Stocks and Options with Moving Averages comes with a 100% Money Back Guarantee. Use the strategy and guidebook for 60 days and if you are not fully satisfied with the results, you will receive a full refund of your purchase price.