Hey. What's up my friend so. Let me ask you have you ever you you know noticed that the price is respecting a certain moving average on the chart buy. He saw it bounce once bounce twice bounce.

Three times. So this time round is coming back for a fourth attempt for the bounce. And you are like a sniper. You know hunting them waiting waiting to get the kill so when the price comes back and retest.

The moving average for the fourth time. You buy you get stopped out man. What's going on rayna right well i feel you right and this is why you know you're watching my video here today right exactly right so. This is called like no reminds me of my wife right you know reyna you can't cook for nuts man exactly that's why i married you yeah so anyway.

Let's get started first let's talk about the truth behind the 200 day moving average. If you started you know technical analysis or follow traders for a while you'll know that a lot of them swears by the 200 day moving average thing that is the most important moving average to pay attention to you know both traders and investors will you know give a lot of focus to this moving average. But uh let me just share with you their expectations right when dealing with the 200 day moving average. So what you'll see is that you know they'll say they know the 200 day moving average is the most watched level on the charts.

Look at how the price bounce off here here. Here and here on the 200 day moving average well that might be true in some instances. But in reality right the market rarely. Respects the 200 day moving average to you know to the pip like this right instead what happens is that moving average.

Right is best used in different type of trending markets for example reality is more like this let's say the market is in a strong uptrend you are better off right with a moving average such as the 20 period. Moving average in this case. It's this rate line over here in a strong uptrend. A 20 period.

Moving average will be more relevant likewise. If the market is uh has a deeper pullback. It's what we classify as a healthy trend. You would be better off using a 50 period moving average like this blue line over here.

Okay and of course. If the market has even a deeper pullback right where we classify as a weak trend. Then you can use the 200 period moving average that most traders and investors you know swear by yeah. So that's kind of like the reality of trading right and the lesson that i want you to take away here.

Is this is that there is no best moving average out there yes. I know the 200 200 day moving average is the one that gets the most talk about right maybe. Because i have no idea why right. But there's really no best moving average out there because it depends on the context of the market.

If the market is for example. Let's say in a range. No moving average is going to you know be working well right in such a market condition and of course. If the market is trending like it's in a strong uptrend.

Then hey you're better off using the 20 period moving average. If the market has a deeper pullback like a healthy trend. Then hey you're better off using the 50 period moving average and of course if the market is in a week trend. You can stick with the 200 day moving average right because trust me right.

If the market is trending strongly. And you overlive. A 200 day moving average you can wait till. The cow come home right.

The price right will hardly re test the 200 day moving average right because it's in a strong uptrend right. It's kind of like gandalf right gandalf can wait until his beard right grow. So long and touch. The floor.

The price will still not re test the 200 day moving average. When it's in a strong uptrend does it make sense moving on number two the truth about moving average crossovers. So often when you know traders hear about moving average crossover. They think that you know when the moving average crossover happens right boom right you capture you know massive uptrend towards the upside.

It's looking something like this so you can see over here. When the 50 crosses above. The 200 day moving average boom. Right wow.

Right now look at this immense profit on this particular trade. So yes that could happen once in a while but in reality. When you try to trade the moving average crossover. What usually happens is this right you can see over here.

Numerous moving average crossover occurred over here here here and here you can see the market pretty much is you know whipsawing up and down. So you can see that clearly right now uh your reality and expectations is actually two different things right so for moving average crossover to work yes it can work. But there's one very important thing that you must pay attention to which is uh. This is that you must trade many markets right so it's kind of like you know wanting to get your wife pregnant are you gonna shoot once a month or 20 times a month of course 20 times a month increase your odds right so same thing for trading moving average crossover to write a trend.

You've got to use that to capture trends. You can't just be trading. One market. You're going to be trading like 20 30 40 markets to increase your odds of capturing a trend.

So the same principle applies over here and that's not all right moving average isn't the crossover isn't just used to write a trend because you can also use it as a trend filter. What does this mean this means that moving average crossover can give you a bias to know whether should you be looking for buying opportunities in the market or selling opportunities in the market. So let me give you an example so you can see over here this chart is the australian against the canadian dollar daily time frame you can see that right now the 50ma is below the 200 period. Moving average sd market on this crossover over here.

So what it can do that is that at this point. In time if you see this chart on the daily time frame on aussie canadian you can tell yourself that okay. I will then only look for selling opportunities. And you can actually look for selling opportunities on the lower timeframe so for example if i bring you down to the lower timeframe.

This is the four hour frame. You can see that this market is in a downtrend making a series of lower highs lower highs lower highs. And lower lows. Lower lows lower lows.

And again. Using basic technical analysis. You know you know this is the area. Where previous support could become resistance and if the price goes up higher.

You can look for selling opportunities right at this area of resistance. Maybe something as simple as like a shooting star pattern like this right right. And then this tells you that there is a bearish price rejection that sellers are in control over here and can look for selling opportunities to see if the market continues down lower from here so again you can use the moving average crossover as a trend filter right to give you buyers right and of course. You can then go down to a lower timeframe to help you know fine tune your entry number three the truth about the moving average bounds right so for example.

If you overlay your chart let's say in a healthy trend and the price. Respects the 50 period moving average. Many traders will think that oh man rainer the price comes to the 50ma bounce comes to the 50ma bounce comes to the 50ma bounce right look how powerful right the 50 period. Moving average is right the moment.

The price touches it boom right it rarely is higher. But in reality right the market usually has a few tricks up their sleeve. So if you were to trade a healthy trend. And you know that the 50 period moving average is a useful moving average to be trading in such a market condition.

Here's what you can expect you can see that the market doesn't necessarily have to respect the moving average to the exact pip to the exact tick right. You can see over here it actually trades below. It and then you rally up higher trades below it rallied by it trades below it rarely about your trades below it rarely up higher. So if you were to trade this thinking that the price will bounce off the moving average to the exact pip right you will be solely disappointed so treat this you know give it some buffer treat it as an area of value not a particular line.

Where the market must definitely bounce off it right so a lesson is this right is that when the price respects the moving average treat. It as an area of value you've got to have you know some compromise and expect that sometimes the price might reverse earlier and sometimes it might reverse later like how i have a happy marriage with my wife right you know i always admit that i'm wrong. And she agrees with me right also another tip for you is this is that you can also set your stop loss a distance away from the moving average since you know that it's an area of value right so for example. Let's say.

If you were to be trading the moving average bounce like this okay let's say the price. Respects the for example. The 50 period moving average bounce off once twice and it comes back here and bounce up again. You don't want to set your stop loss just below this lows.

Because what could possibly happen is that remember this is an area on your chart. The price could reverse down lower hit your stop loss and then continue up higher. Which is you know pretty common as what you've seen earlier. So give your stop loss a buffer set it the distance away from this price structure setting the distance away from the respected moving average.

So if you ask me what i usually do is i set it a distance away from from this lows. Right possibly somewhere about here. So my trade right has more room to breathe so this over here from here down to here will be the the distance of my stop sl right so give your trade some room to breathe so looking back at our previous example. Over here you can see over here right.

Let's say there's this hammer. That's being formed over here okay and when the when this market closes for the day. If you set your stop loss imagine below this low over here. You will likely get stopped on this pullback before the market really up higher.

So this is what i mean by you know set your stop loss a distance away from the price structure a distance away from the respected moving average to give your trade a chance to breathe. Now if you have enjoyed this training. So far and you want to learn more about such a trading methodology. You know call up price action trading or discretionary trading.

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