Instructions

Among many free websites that track the stock markets’ moving averages are MarketWatch.com and MSN.com. Click on the drop-down menu for Upper Indicator, and you be given a choice of the SMA or EMA, the exponential moving average. The EMA is a weighted average that gives more importance to the most recent data and less to the earlier days in the sample. Either moving average is fine; there has never been any conclusive proof that one is better than the other.

Use a cross-over system comprised of two moving averages of varying duration. This is a simple and commonly used system. For example, you can use the 9-day and 18-day moving averages, and when the 9-day crosses above the 18-day, this is a buy signal. When the 9-day crosses below the 18-day, that constitutes a sell signal. This is a short-term system that will usually keep you in trades for a few days or weeks. You can also use the 50- and 200-day moving averages for longer-term signals that will keep you in trades for a few weeks or months.

References

Resources

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