How Pro Traders Use Moving Averages: 50 MA Strategy!

in this video we are going to review the 50 period moving average a strategy used by Pro Traders let's find out how from a very basic standpoint a 50 period moving average is defined as a charted average price of 50 periods depending on what your charge set at it's 50 periods of any instrument that's it that's your moving average let's describe not only the pros and cons of the 50 period moving average but let's dig deep into how Pros use this to get in and out of Trades look we'll discuss specifically about the 50 period moving average but theoretically you can use these strategies on any time frame look as Traders we are looking for any type of edge a simple moving average can give us that so you plot it you look at it you back test and you could find Winning Edge to improve your p l all right there's cons let's do one right now the moving average is a lagging indicator what does that mean price moves first chart gets charted after so when the price moves then you start to get these Mas built right so it's going to be a lagging indicator it's going to tell you where the stock has come from thus building that moving average all right but that con definitely gets trunked by this Pro what do I use this 50 period moving average for it is a directional change of momentum that's it we trade it based on momentum the 50 period moving average so there's no doubt you've heard about the 50 period moving average and the 200 period what we look for is kind of like support and resistance as we grind up towards the 50 period moving average if we can break it that's going to be a trend change I like to use that even on a one minute chart I just set a one minute chart look that's key for me because I'm a scalper we use the 50 period moving average to determine our ins and our outs whether or not we want to be long or whether or not we want to be short this chart right here shows you that when the 50 period crosses the 200 period look at this momentum it's a long trade it's upside the trend is your friend play the long when you see this now why is the trend your friend man it's simple you want to be in the way the market is going don't fight it you don't fight the fed and you don't fight a trend that's what these moving averages are telling you if it's an up move just go long we're above the moving averages the trend is your friend that's a long break right there all right it's just simply not that simple you might be thinking hey moving average costs don't work all the time and you'll be 100 right what you're looking for though is a directional bias that's simply it doesn't mean that just when those lines cross we go in that direction but it does give you a reason to think one way or the other now here's another concept that we can use these moving averages to assist us finding those winning trades if you're looking for an opportunity and you know you want to be long right look for a stock and you can use a filter for this filter out stocks that have both the 50 period and the 200 below the current price meaning we are trading above the these moving averages that'll give you the trend and a directional bias you're looking for the final concept to consider when dealing with the 50 period moving average of course risk management those of you that watch Trader TV live know this is my favorite setup and that is using the 50 period to get out of a winning trade if you're in the money and your stock is above the 50 period and you're like wow I'm a dollar in the money but this 50 period moving average is hovering around the 80 cent Mark I put my stop once we break it so we might be a dollar in the money but I let it ride up until we break below that 50 period that's my exit Point like most trading ideas look it's a moving right you can't just rely on the 50 period moving average if every Trader did that it simply wouldn't work so what you want to use it is for a guide you want to make sure that you are guiding your trades based on above or below that 50 period moving average it's really helped me recently with some of these big NASDAQ names the moving average deals with with just that the price but there are so many more moving parts to this including are there micro issues happening with the company what is the broader market doing use it as a guide especially if you're trading individual Equity names all right I hope you gained a little bit of information there about the 50 period moving average and how exactly to use them to trade but make sure you tune in every single day to Trader TV live watch all of our videos and watch us live as we trade these markets and use some of these techniques daily 8 30 join us

Channel: Live Trading by TraderTV Live

Views: 12,581

Keywords: day trading strategies, moving average trading strategy, moving average crossover strategy, moving average explained, moving average tutorial, how to use moving averages in trading, moving average indicator strategy, moving average day trading strategy, 50MA, 50 MA strategy, moving average, moving average trading, moving average indicator, moving average forex, moving average crossover, moving averages for day trading, moving average method

Id: E1rVzM7sY2I

Length: 4min 34sec (274 seconds)

Published: Sat Dec 24 2022