Thread by @MarketScientist

Moving Averages Simplified📒

🔵Its a technical indicator used by traders to identify trading opportunities
🔵Its a Lagging indicator
🔵2 MAs which traders use more often are..
SMA(Simple moving average) & EMA(Exponential moving average)

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#StockMarket #Technicals

Moving Averages Simplified📒

SMA
🔵It is calculated by dividing the averages of closing price for certain period by no. of days in that period
🔵Its helps in assessing the bull or bear trend in the market or a stock
🔵Some commonly used SMAs are 200,100,50,20&10 days

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Moving Averages Simplified📒

EMA
🔵It places more weightage on recent data
🔵To calculate it we need to calculate smoothing weightage first
🔵For a 20-day moving average, the smoothing weightage would be
2/(20+1)= 0.0952.
🔵It reacts more rapidly in trend chanes vs SMA

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Moving Averages Simplified📒

Crossovers b/w Averages📝
🔵When the shorter moving average crosses above the longer moving average it is called Bullish crossover
🔵when the shorter moving average crosses below the longer moving average it is called Bearish crossover

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Moving Averages Simplified📒

Applying Crossovers
🔵Golden cross considered as most bullish BO pattern which signals start of a new bull trend the market
🔵Death cross considered as most bearish BO pattern which signals end of a trend
🔵Many traders buy/sell basis Crossovers

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