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How to Set Up Moving Average In Trading [SMA, EMA, Weighted] - Moving Average Trading Strategy - YouTube
Channel: Money Moves Investments
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king aka mr moose do you fear my pen
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in this video we're going to go over how to use a聽
moving average there is a lot of videos out there聽聽
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people teaching moving average in either very聽
complicated way or [ __ ] you really don't need聽聽
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to know what i'm saying or a very simple way where聽
you're going to use it and lose money so i'm going聽聽
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to teach you how to properly use a moving average聽
and identify moving average that you would like to聽聽
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lose lose use use for your particular day trading聽
style the different moving averages there are some聽聽
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calculations of them what makes sense to you聽
for your anxiety level when it comes to trading聽聽
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because moving average crossovers are not it all聽
right they usually get you into the trade late聽聽
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unless you have moving averages such as mine that聽
don't do that right there's a reason why i made聽聽
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them that way but the ones that you get like聽
simple moving average crossovers exponentials聽聽
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either get you in too fast false breakouts here聽
and there and you want to get caught up in that so聽聽
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in this video i want to go over just how to use a聽
moving average identify it different settings etc聽聽
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etc let's go over to the charts all right guys so聽
in this video i'm not gonna try to over complicate聽聽
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it try to make it real quick we're gonna go over聽
what a moving average is and how to use one so a聽聽
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moving average is a line that plots on your chart聽
that gives you the average of current price data聽聽
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so you will hear reference to the 200 day period聽
moving average the 20 the 50 the 100 period day聽聽
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moving average and all that means is majority of聽
the time traders like to trade the daily chart so聽聽
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they're referring to the amount of candles聽
that movement average is calculating so let's聽聽
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plot the three most commonly used moving averages聽
and as time progresses i am going to introduce聽聽
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you to others um that we actually have built into聽
the dawn itself there's so many there's the whole聽聽
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there's the jma the edsma the you know there's聽
so many moving averages that you can learn about聽聽
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that calculate price differently so right now we聽
have the simple moving average and right now it聽聽
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is set to a period of 21. and what does this mean聽
that right now on us 30 on the daily time frame聽聽
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it is calculating the average price of 21 candles聽
what you have to know about all moving averages聽聽
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is they are what's called lagging indicators and聽
what a lagging indicator is it does not predict聽聽
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future price movement but only adjusts based on聽
past price movement so if i were to rewind from聽聽
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right here right you can see that as price already聽
broke up above here the moving average is just聽聽
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catching up here and as price continues boom you聽
can use it as an entry signal now another thing聽聽
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that's good for moving averages is they act as聽
what's called dynamic support and resistance if聽聽
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you haven't seen my support and resistance video聽
please go check that out but basically at the end聽聽
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of the video i go over real quickly how you can聽
utilize it right it's basically a moving support聽聽
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and resistance in conjunction with a combination聽
of other ones you can use it as entries and to see聽聽
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zones right so for example here you have a lot of聽
rejections and the moving average is moving real聽聽
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close to price and you can see it's rejecting聽
and rejecting and you can start using this聽聽
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as you're moving support and resistance and聽
your bullish engulfings or however you want to聽聽
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use your entry signal right reject it here you聽
could enter and call all that and then once it聽聽
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breaks down it acts like support right broke聽
retest broke back up came back down and then聽聽
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here you go right and you can see here聽
as price danced above it boom you could聽聽
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have entered off these rejection points and聽
you're here you would have caught this so聽聽
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with the 21 period simple moving average this聽
one's mostly used for longer period trading聽聽
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because it's an average of just strictly whatever聽
period you set it to now another famously used聽聽
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moving average you can use is the ema exponential聽
moving average and if i place that on the chart聽聽
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you can see that's the white line you can see聽
the calculation behind this moving average is聽聽
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slightly different so even though it's calculating聽
the same 21 and of course you can change it to any聽聽
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number that you want it is calculating closer to聽
price so compared to the simple moving average聽聽
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the exponential moving average can move a little聽
bit faster to price and this is one that's more聽聽
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commonly used on lower time frames to react聽
even though it's still a lagging indicator聽聽
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it reacts to price change a little bit faster聽
so you can see that how the green line which聽聽
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is the simple moving average is kind of floating聽
above but the exponential when it crossed the same聽聽
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point here actually followed price a little bit聽
closer so another moving average that's also used聽聽
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is the weighted and we made this red and you can聽
see that is exactly that if it's weighted and it's聽聽
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way closer it's pretty much on top of price聽
in either direction now you can see that it's聽聽
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stuck to price like a glue and it actually moves聽
closer to price um compared to the other ones聽聽
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how can you use the exponential simple for entry聽
signal now if i were to jump down to let's say the聽聽
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one hour time frame and i got the simple moving聽
average what people like to do and you can see聽聽
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how it crosses the lower you make your moving聽
average the faster it is so if i made this 10聽聽
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it is calculating it's going to start calculating聽
the past 10 candles compared to current price聽聽
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right and you can see how price change it got聽
a lot quicker so i added another moving average聽聽
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right and i made this period let's say 21. i can聽
start using this as signals right so the green one聽聽
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is my 10 my 21 is um the slower one compared to聽
the 10 because it's calculating more price data聽聽
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than the other one now you can also use in聽
conjunction with the um 200 moving average and聽聽
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i'm also going to plot another one real quick so聽
200 will show you the overall trend in the market聽聽
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if you have uh we went over how moving averages聽
can be used as dynamic support and resistance聽聽
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the 200 period moving average is used to show the聽
overall trend of a market on a current time frame聽聽
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so now it's calculating 200 candles and of course聽
it's going to move a lot slower compared to the聽聽
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other ones because it's calculating more candles聽
than it is but if you were to look across you can聽聽
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see how it reacts to price as a major dynamic聽
support and resistance resistance support聽聽
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support here resistance support here support here聽
resistance broke through became support you can聽聽
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see how it can be used as a really good dynamic聽
support and resistance is this is kind of like聽聽
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teaching you a strategy and also teaching you how聽
to use movement damage moving averages uh to your聽聽
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advantage so what lower periods from like you聽
know zero to pretty much 21 that's famously used聽聽
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can calculate short term trends because they are聽
reacting to short-term price now if i were to put聽聽
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another a moving average such as the 50 this is聽
one that's used for mid-term price trend so you聽聽
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can see that this is the the 200 is the long-term聽
and the 50 period is our mid you know short term聽聽
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midterm um price trend identification so you can聽
see that it's calculating only 50 candles of price聽聽
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but it's giving you a better overall trend so聽
how can you use this conjunction with four simple聽聽
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moving averages for price entries well 200 is now聽
at this point right here is resistance it broke聽聽
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through we had our buy signal right from beneath聽
it we had our buy signal we got the cross right聽聽
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beneath it price broke retested our 200 which is聽
um it became support and now you can enter for the聽聽
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buy because we have a confirmation of now what聽
not only did it break resistance became support聽聽
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prices above the 200 moving average right which聽
is one in the same way i just explained we had聽聽
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our buy signal from down here and our 50 period聽
moving average is showing us the midterm um to聽聽
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possible long-term price trend right so we could聽
have entered here used our atr if you haven't聽聽
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seen my atr video click the link above to check聽
that out how to calculate your stop loss and your聽聽
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take profits and got a nice little entry here now聽
you can also use moving averages again or moving聽聽
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dynamics upon resistance so you can use the 50聽
period preferably better to see where your price聽聽
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can possibly pull back so because it's a lagging聽
indicator how i've always been able to identify聽聽
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certain peers or price may come back to is my聽
moving averages so you can see right we got that聽聽
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breakup and then you also know that price has to聽
pull back at some point when the 50 period decides聽聽
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to finally get here i can identify this point this聽
point this point this point this point all the way聽聽
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to my left if you haven't seen my support and聽
resistance video go check that out because again聽聽
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all these moving averages are doing are聽
calculating past price data the only differences聽聽
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to make is what type of moving average you use聽
which one that you're comfortable with and what's聽聽
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your trading style if you are someone that likes聽
to hold positions for a decent amount of time聽聽
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a simple moving average will probably do better聽
for you because it gives you a better average of聽聽
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price without giving you fake outs and stuff like聽
that such as the exponential or weighting that聽聽
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reacts to price data a lot faster right so you聽
know play that through and you can see how price聽聽
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rejected off that 50 period rejected again and聽
then price continued to go in that direction um
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even though it did break down a little聽
bit the 200 period is acting as your major聽聽
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support and then you still have confluence to聽
enter on that cross broke above the 50 and then聽聽
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you could definitely entered right over here for聽
the rest of that trade right and again i didn't聽聽
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you know i didn't uh cherry pick i'm giving you聽
guys live examples here right so that is how to聽聽
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use the simple moving averages right so let's聽
start putting a whole bunch of exponentials聽聽
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on the screen so you can see how in comparison聽
how those work let's put some on the screen here聽聽
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right so let's put the 21 period on the聽
screen and then let's make it another 50聽聽
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and then let's make this one 100聽
and then let's also make this 200聽聽
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right so we have our 21 50 100 and 200 period聽
moving average exponential moving averages聽聽
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now let's go back to where price was before right聽
into this example compared to the simple moving聽聽
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average you can see that price is actually a lot聽
tighter right a lot tighter and let's keep it聽聽
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consistent actually let's add another exponential聽
because i actually want to get a little bit more聽聽
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in depth and let's put that 10 back on right just聽
just put that 10 back on and let's make that one
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blue right stuck on price and what聽
the exponential can really help with聽聽
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is um assets that are very volatile such聽
as us 30 especially when using on the five聽聽
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minute time frame now here's how i want you to聽
learn how to identify price volatility you see聽聽
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how i have all these different combinations of聽
the same ema i have the 10 which is calculating聽聽
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price data of the last 10 candles the 21 period聽
50 100 and 200 right as price gets more volatile聽聽
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these movement averages spread if you were to聽
take your your your hand and make it into a fist聽聽
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and then spread them wide open think about it just聽
like that showing you how volatile price is going聽聽
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or can be the more it spreads right in all of聽
these all the space in between each moving average聽聽
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can react as a zone within itself why is this聽
important because once you start getting really聽聽
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good at utilizing indicators and of course right聽
i don't teach moving average basic moving average聽聽
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crossovers because of course the don itself聽
is really a moving average crossover but it's聽聽
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a little bit more advanced than what i'm showing聽
here most moving average crossovers actually get聽聽
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you into late signals but look compared to the聽
simple moving average that actually got you in聽聽
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at this the exponential got you in on the break of聽
this long candle right you get in a lot faster and聽聽
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why because the exponential is actually reacting聽
to price a lot faster so when price comes back聽聽
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and reject we went over how you can get entries聽
off the 50 period moving average right and then聽聽
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that one candle here broke down but look where聽
it rejected off the 100 period moving average聽聽
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so now as you accumulate it again you can also聽
use the sandwiching of moving averages to identify聽聽
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ranging markets when you have a system of them聽
together and these are widely known right i'm聽聽
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not teaching nothing new you know the combination聽
of these exact numbers are widely known um you can聽聽
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see when they sandwich um you have accumulation聽
when they spread you see volatile movement聽聽
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when they sandwich you see accumulation when聽
they spread down you see volatile movement and聽聽
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it's just reacting off price data and you can use聽
these as dynamic rejection zones right so as price聽聽
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on the 10 comes down it's testing that 21 you聽
know if you trade bullish engulfings that's a聽聽
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good entry right it broke down here and you want聽
to identify like should i keep holding this trade聽聽
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well you have an exponential moving average that's聽
moving extremely fast right so i wouldn't rely on聽聽
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that 10. maybe the 21 and then the 50. if it broke聽
off broke from my 50 i'm gonna have to look up聽聽
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to my left institutional candle long candle has聽
to come correct if it rejects off my 50 right i聽聽
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think it's a morning star pattern right um you can聽
enter on that and hopefully you guys see how you聽聽
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can use moving averages more than just you know聽
simple moving average crossovers right and then聽聽
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this is kind of cool what happens is when you get聽
reversals right you master market structure your聽聽
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master support and resistance if you haven't seen聽
my market structure video go check that out right聽聽
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this area right here price broke and now where聽
price is now accumulating between the 100 and聽聽
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200 period moving average rejected from the top聽
rejecting from the bottom right and then if i go聽聽
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cover this and then just extend this left one聽
this zone the tops of these zones right so you聽聽
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can use this and it's very powerful if you learn聽
how to really just identify how to use indicators聽聽
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properly instead of just you know gain buy and聽
sell signals from you know fake algo companies聽聽
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so if you really you learn how to use them they're聽
really really good assets so look let's go boom聽聽
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and get rid of that let's add some weighted moving聽
averages and do the same thing right so let's
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10 21 50 100 200. now can you guys spot any聽
difference between the exponential and weighted聽聽
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it is so tight on price right聽
it's really really tight on price聽聽
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you're going to be subjected to a lot of聽
fake outs even the 200 period moving average聽聽
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you're gonna get faked out a lot you're going聽
to get faked out a lot and not to say this isn't聽聽
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a good moving average it can be in conjunction聽
with other ones can be really really good right聽聽
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still acts like your dynamics are point resistance聽
but it reacts to price data a little faster so聽聽
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where can you use this where it could be a聽
little bit more effective well if you're a聽聽
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scalper this is probably your dream because聽
it just reacts really well same rules apply聽聽
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right if you have your shorter term moving average聽
crossing over a longer term moving average it聽聽
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gives you buy and sell signal then you use the聽
other higher ones to confirm trend direction and聽聽
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then there you go right real tight snipe entries聽
here but if you're not careful and if you don't聽聽
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have experience in the market you can get faked聽
out a lot right you can get faked out a lot but聽聽
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you can see on pairs such as us 30 on the five聽
minute shoot we can even go down to the one minute聽聽
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and you can see how you can utilize it to聽
enter real real snipe entries comparatively聽聽
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to a small moving average if i was just a not聽
a small moment now just simple moving average
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right let's just make this one let's make this聽
one 21 and just make it white and really bold聽聽
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right that's the 21 period weighted that's the 21聽
period simple and look at the difference between聽聽
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uh price catching it just gets you in the way聽
to get you in real real snipey real snipe real聽聽
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tight close to entry and that's why i recommend聽
if you're using a scalping strategy exponential聽聽
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exponential weighted is probably best friend聽
if you're trading higher time frames and聽聽
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you're holding positions a little longer then聽
a regular moving average simple moving average聽聽
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might be better for you so you won't get whip聽
sold out of trade so that's just a quick video聽聽
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of understanding simple moving averages the three聽
basic ones right you got your simple weighted and聽聽
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exponential moving averages and the more famously聽
periods that you can set to identify trend聽聽
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direction in this next video we're going to start聽
going over how to use a baseline and how to trade聽聽
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with the trend all right guys if you found that聽
video helpful drop a like for me smash it smack it聽聽
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do whatever you got to do over there in the聽
description down below is my training view聽聽
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my instagram my discord my free discord of free聽
signals and chat and my seven day free trial you聽聽
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get access to absolutely everything um you know聽
like everything you know indicators algos bots聽聽
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my daily calls i think i said signals already聽
like everything for seven days all right see聽聽
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you guys in the next video you don't need me no聽
friends back on my head and they wanted me david聽聽
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you still see me with the roof of the bench聽
my [ __ ] is bad at boujou ain't gonna back聽聽
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you don't matter to me super big guns like it's聽
call of duty say this your man's really radically
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