10 Reasons moving averages work as trading tools.
- Moving averages filter trends in different timeframes.
- Moving averages can create entry signals at the beginning of a trend.
- They can be used as exit signals when price dips below them.
- Moving averages can be used as trailing stops so you can exit with profits when a trend starts to bend.
- Moving averages can be used in crossover combinations for slower signals.
- Moving averages can help filter volatility.
- You can do historical back tests of price action to develop price action trading systems using moving averages.
- Moving averages are reactive technical trading tools not predictive.
- When price falls below and then breaks back over a moving average it is a great signal for a potential reversal.
- Moving averages are better gurus than talking heads on financial television.
Moving averages have a place in any trader’s or investor’s strategy. They are my favorite filter for price action.
