Hey hey: what's up my friends, so in today's training i want to share with you the four golden rules right when it comes to using the moving average indicator. Number one avoid trading when the price is far away from the moving average, especially in a trending market. Why is that simple right say? For example, the market is in a trend like this goes up, comes down, goes up, comes down, goes up comes down and it goes up. Then, if you overlay with let's say a 50 period moving average, you can see that in this case right, the price right now is quite a distance away from this respected moving average, and this is where you want to hold your horses right and not buy just Yet why is that? Because there's a good chance right based on this historical price section of this market, is that the market could make a pullback.

So imagine if you're buying at this highs and the market makes this pullback over here chances are. You will be stopped out agree, so that's kind of like the first rule that i want to share with you is avoid trading when the price is far away from the moving average number two. Is this use moving average as an area of value in a trending market? So what does this mean? So you know at this point: you might be thinking okay, so you don't buy when the price is far away from the moving average. So where do you buy, and this is where you can use the moving average right as a key to help you with it? So once again, this is a trending market and then what you want to do is to identify right the moving average that the trend is respecting.

So in this case, let's say this is the 50 period moving average right? How do you know a trend? Is respecting a particular moving average, so this is where the two test techniques come into play. So this is where i want to see right. The market has the moving average at least twice tested once tested twice. If that happens, so then there's a good chance right.

It could respect the moving average and test here for a third time, and this is where you want to look for buying opportunities. This is where the area of value is okay, so you can use moving average as an area of value when the market is trending and to find out whether um the trend right respects a particular moving average. You can use the two test technique right, which i just shared with you number three there's no best moving average out there. So often traders ask me hey, we know, what's the best moving average man.

Well, guess what there is no best moving average and let me prove it to you, so this is the chart of oil eight hour time frame, okay, and you can see that in this case, this chart on this time frame is respecting the 20 period moving average Tested you know once over here twice over here. On the other hand, you can look at another chart. This is the chart of our crocs right daily time frame. This is the 50 period moving average tested once you know twice three four five, a little bit of choppy price action over here and then continue up higher.

So you can see that again, this uh chart on the daily time frame respects the 50 period moving average and just to backtrack a little bit. If you see this chart over here, let me ask you: do you want? Do you want to be buying at this heist? Well, if you just read one or just study what i just shared with you, we know that this is not a good idea, because there's a good chance, this market could possibly pull back, possibly towards this previous resistance, which could become support or towards the 50 period. Moving average and if you were to buy around this highs, chances are when the pullback comes. If it comes, you are likely to get stopped out unless your stop-loss is somewhere here.

Then then, okay, okay, you don't have to worry about that right, but chances are nobody's going to put a stop loss at this level so moving on right. This is another one. This is a weak trend, so you can see that in this case the price respects the 200 period moving average almost over here here here so again, the message here is that there is no best moving average out there. The key thing right as a trader is to know the type of trends you want to trade or know the current type of trend.

It is right and then use the appropriate moving average to trade along with it. So, for example, if there's a strong trend, you can use the 20 period moving average. If it's a healthy trend, you can use the 50 period moving average to help you identify your area of value and if it's a weak trend, you can use the 200 period. Moving average to help you identify your area of value and, finally, the last golden rule is this: avoid using moving average in a range market? Why is that very simple, because when a market is in a range, your moving average is probably something like this, and if you look at the price it just goes up comes down, goes up, comes down, goes up.

You just slice through your moving average like hot knife through butter, and your moving average is essentially useless in a range market. It's kind of like you know you getting friend zoned by a girl all right. The only way out is to stop messaging the girl to ignore her totally, and it's the same over here. If the market is in a trend, ignore the moving average, don't use it at all.

That's how you kind of you know: uh avoid those unnecessary losses. Okay, so that's the fourth and golden rule. So, as a quick recap, here's what you've learned right number one avoid trading when the price is far away from the moving average number two. You can use the moving average to act as an area of value using the two test technique which i've just shared with you number three there's no best moving average different types of trends.

They have, you know, different types of depth of the pullback, and then you once you know that right once you can identify the type of trend there is, you can use the respective moving average to kind of trade. Those trends, for example, healthy trend, is a 50ma healthy. Strong trend is the 20ma and finally, you want to avoid using moving average in a range market, because it's pretty much useless so with that, i hope you enjoyed it smash a thumbs up. If you do, if you don't, then hit the subscribe button with that said, i wish you good luck.

Good trading, i will talk to you soon. You.