Hey hey, what's up my friend, so in today's training I want to share with you moving average mistakes right that almost all traders may not even I, myself included I've, been making this mistakes right. Some of this mistakes for four plus five years, and only then I realized - I mean how CD I was so hopefully that won't have to take you four years or five years, because I'm gon na share with you right now mistake number one. You think that there is a best moving average out there and you. There are often right traders come to me and ask hey Rana, which is the best moving up average out there right.

Is it the simple moving average? Is it the exponential moving average? Is the weighted moving average or horrible you know, hey Rana is the 50 period moving average better than the 20-period moving average? Oh, I heard the 200-day moving. Average is respected right by many people in the trading community, or maybe I should pay attention to it right. So, which moving average is the best Rainer now here's the deal there is no best moving average out there and I'm gon na prove it to you right now. Here's why? If you look at this chat over here, okay, it might seem that hey the 20-period moving average seems like the best one over here for this market.

Alright, the five-year Treasury note futures - I can see how the price retesting the 20ma over here here and here right. That seems like the best moving average, but then, when you go into, let's say a different market like euro dollar. In this case, it seems like the 200 period moving average is the best one over here right. Clearly, this market respects the 200 ma right over here here here over here Wow or how about this right.

If you look at the China a 50 - and you see over here at this point in time, it might seem that hey Rainer the 50 period, moving average seems like the best one over here. So can you see where I'm coming from is that there is no best moving average out there? The secret is this: is that you wan na pay attention to the price structure. First then use the appropriate movie average for it. So what do I mean by this? So let me give you an example: if you see a market image wrong, train right, the train is stronger.

Pullback is shallow chances. Are you want to use the 20-period moving average because it's more responsive you can have help you better. You know time your entries, for example, if you look at the five-year Treasury note futures, you can see it right now. This market is in a strong uptrend right.

The pullback is relatively shallow and that's why the 20ma is a good fit in this market condition right. Shallow pullback shallow pullback shallow bay, can you see where I'm coming from I'm not trying to find the best moving average out there? I'm trying to understand the current price structure of the market, I'm trying to current I'm trying to understand the current market structure and then use the appropriate moving average for it. Oh how about if the market is in a wick trend, the trend is not very strong. The Pooh Bear is deep, which moving average should we use something like - let's say, euro dollar this market over here you notice that the pullback they are relatively deep right notice.

Does the dev of the pullback pullback, the pullback? The pullback is huge one over here. So that's where you want to use a longer term, moving average like the 200 period moving average. Does it make sense? Okay, so so here's the deal. Okay, there is no best moving average out there.

First and foremost, you want to understand the current market structure, because once you understand the current market structure there, you know, which would be the best moving average to use for the current market condition and here's the kicker right here is the kicker. Let me just give you an example over here right. You can see that the the market structure - okay or rather, let me give you this one over here. The price structure, the MUC is structured, the trend structure in the market.

It's never static, it's always changing. That's. Why you see the market goes from an uptrend to a downtrend, to arrange, etc same for trending market it can be in a healthy trend, goes into a strong trend or becomes a weak trend. For example, if you look at the five-year Treasury note futures - and this point in time right - it might seem that this market is in a healthy trend right, respecting the 50 period moving average.

That's the ones twice thrice four times over here, but remember. I said that the trend structure is never static, is always changing. Then you can see it. It has evolved over time right now.

It has picked up right and the Train now has strengthened and it seems that right now the twenty Amira is a better fit. Given this current trend structure at this point in time, okay, so so this is important right. There is no best. Moving average out there what's important, are, is to understand the current market structure and then fine and it once you understand it right, you will know which is the best moving average to use right in debt market condition right.

So that's the first mistake all right: traders thinking man, there is a best moving every settings out there mistake number two traders use moving average crossover to time your entries when you do this right, you're, always one step behind, sometimes even two or three steps behind all Right, let me let me give you an example: here's the thing about moving average crossover right. So, if you look at this chart over here, okay, these dollar, against the dollar against the Mexican and some of the popular moving average crossover is, you know the five cross. The ten period moving average like this okay, so in this case you can see that when the rate one over here, this is the five period moving average, and this is the ten period moving average. So you're looking for shot signals right, you can look to sell in the five cross below the ten period moving average and in this case right.

This is where the crossover cut, ready five period crosses below the temperate moving average and when that happens, right you'll be looking to sell and this mix candle open right, if you were to you, know, use it to time your entry, and you can see that it's Pretty late because the market has really don't move quite a bit down lower and that's the thing with moving average crossover, it always legs alright, compared to traders. Reading the price section of the market or trader you know relying on you know: candlestick patterns to time their entry. Those traders will always be faster compared to a trader who relies on moving average crossover. For example, if you look at this chart right an astute price action trader, they would consider this a false breakout where the price takes out above this high, reverse and close near the low.

So this is a false breakout. Some traders might even call this a shooting star pattern and it could go shot on the next candle open, which is this kind over here on the next candle open here. Can you see the difference between someone using moving average crossover to time your entry and someone reading the price action right to time the entry, a big difference, so if you're, a discretionary trader and you're relying on moving average crossover to time your entries, you might want To you know, reconsider that technique again right, there's a time and place for moving average crossover, but not so right for this question area traders, because price action traders idea will always be your own ones that were hit compared to a trader who relies on moving average Crossover: here's another example. If you look at this oil market okay, so if you look at this game, when you look at this chart to a price action trader, this again is a sign of price rejection price to cut this highs, but reject that strongly and close near the lows below This area of resistance, but for a trader right who relies on moving average crossover? Where will they enter the tree? So again, if you see this five and a 10, they will go short somewhere about here, okay, somewhere here, on the candle on open of this candle somewhere here.

Can you see the difference price action trader selling somewhere here, moving average crossover trader selling somewhere? Here you always slower one step behind. Oh how about this one over here did another one at this highs. Okay, we have this price rejection over here here and here to a moving average crossover trader. They would enter somewhere when the price alright, when five has crossed below the ten period moving average again, it would be somewhere - and here this open - I'm sorry - I mean somewhere somewhere here at this open, okay, just one step behind so again.

My point is this: is that if you want to time your entries right, consider learning how to read the price section of the market you'll be faster. However, as I mentioned earlier, there's a time and place for moving average crossover and that's where you are adopting a trend following approach, a systematic trend following approach, then fair enough, you can use moving average crossover to time your entries and exits right and to write massive Trends in the market, but if you're a discretionary trader, I would say this technique would be as beneficial to you. The touching right. This is an important one, you're trading, far away from an area of value, you're trading, far away right from the moving average right and when you trip far away from the moving average.

This is when the price is about to make a pullback when it's about to make a reversal alright. So let me explain to you what I mean by this. So if you look at this this chart over here, this is a next day. Okay, you look at the weekly time frame.

You can see that Nasdaq right seems to be. You know respecting the 200ma. Why is that? Well this? Because of this current market structure, this market seems to be in a wick uptrend right on the weekly timeframe right. The pullback is relatively deep.

If you look at the dep of the pullback, it's deep deep deep. So at this point right, what I'm trying to illustrate is that, where is the area of value? The area of value clearly is around the 200 period moving average around here and a mistake that many traders make is that they look at the chart is o and market is in an uptrend I should be buying, but you don't just want to buy when the Market is in an uptrend, because if it's far away from an area of value number one, your stop-loss is gon na be huge right. If you're gon na set a proper stop-loss, it has to be huge and number two right you're entering when the market is about to make a pullback or reversal. So if you look at this right now, ask yourself: where is a logical place to set your stop loss? If you, if you ask me right, a logical place is at least below this swing low over here below the 200 ma somewhere here, because it doesn't make sense to put your stop-loss here here here or here, because there is no price structure right to support this Prices, the market can just swing now, lower right.

The nearest area of support of resistance, I mean area of support or swing low, is here. This is the nearest one and if you want to reference this, to set your stop loss right, the bare minimum right is at least at this level here and if you look at this right from here all the way down to here, that's a pretty done. White stop-loss and that's why I say that when you are trading far away from an area of value right number, one, the odds are not in your favor, because you know the market is primed for a pullback or reversal and number two right. Your stops are pretty wide and yet doesn't offer your favorable risk to reward on your tree.

Okay, so let me give you one more example: Eurodollar again, this is the shot you should be familiar with, and you look at this again. You can see that the market respects the 200 ma. This is the area of value and a mistake that many traders make is that you look at this. Iranian market is in a downtrend.

Let me short this market. Let me sell and then you look at this pattern. This looks familiar. This looks like a bad flag pattern.

Let me shut the breakdown of this bear flag pattern, but if you understand a real value, if you know where the area of value is on your chart - and you realize that the price is actually quite far away from the 200ma, you know you might not want To sell at that point: okay, because two reasons again, this is where the market is prime right for pullback, a retracement or even a reversal and number two to have a logical stop-loss in place where it has to go at least above this 200 ma. When you place your stop-loss right anywhere from here down to here anywhere between here, there is no area where selling pressure is likely to come in and hold down this lower prices, because, as you've seen right, the area of value is that Li 200 MA. This is where selling pressure right has been shown right to exist and push the price lower here here here here and possibly over here. So this is where you know you want to be selling and that area of value and not far away from it.

I hope that makes sense, so that's the third thing right that many traders - maybe trade, far away from an area of value. So let's do a quick recap right number one. There is no best moving everything out there because it doesn't exist. I've proven it to you because it all depends on the market structure, the trend structure and here's the thing right.

This market structure is never static. It's always moving from you know, uptrend or downtrend range, strong trend, weak trend, healthy trend, etc. Number two don't use moving average crossover to time your entries. This is especially so, if you're a discretionary trader, because a better approach to time your entries is using price action of the markets right, you will get into your trades faster and, finally, you want to trade near an array of value not far away from it, because When you trade, far away from it, your value, the more on your stop-loss, is why, if you are, you know using a proper, stop-loss and number two.

This is where the market is prone to do a pullback or reversal. Okay, so trade near the area of value right moving average can be used right to help you define the area of value and yeah trigger it and not far away from it. So with that said, I have come towards the end of this video. I hope you got value out of it right, so smash the thumbs up.

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