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Moving Averages Whether you get a sophisticated system, or you decide to run the numbers by hand, you need to start your technical education with the simplest and most effective tool that you will find. It is called Moving Averages and you will see them denoted in forms like MA-30, MA-5 and so on. MA of course stands for Moving Average. But the number that follows it represents the period that the average is computed for.

So MA-30 represents the moving average of prices over the last 30 periods.

Note that I wrote ‗periods‘ and not days. The reason is that the time-scale is up to you. If you are looking at short-term trades, then the time-scale can be as small as 30 seconds or a minute or even 5 minutes. If your investment horizon is in the long-term, then you would use days. You can even use them in conjunction to understand the longer trend and the short-term fluctuations.

For instance, you can use a 30-day moving average to get a feel for the long-term trend, and that would give you y0ur bias. So, for instance if the trend indicated an up-swing, then you would have a bias that the prices are going up, and that you should favor long (long is the term used to indicate buy positions) positions. If the long-term trend is moving downward, then you should have a bias for short positions (short is the term for selling).

Typically, you would use two long-term trends, let‘s say an MA-35 and an MA-21 (I find that using Fibonacci numbers gives better results). This timescale is measured in days. That will give you the long-term bias. Then you can have the short-term indicators, like the MA3 and MA8. These are measured in minutes. So, I take the price at the end of a minute, three times consecutively, then add them up and divide it by 3. So, let‘s say at 9:01am the price is 10. At 9.02am the price is at 10.5, and at 9.03am the price is at 10.8. You would take 9, 10.5, and 10.8 and add them up to get 30.3. Divide that by 3 (since it is three periods) and you will get 10.1. As such, the