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Morgan Stanley: It is currently expected that the Bank of England will keep interest rates unchanged in June, compared with the previous forecast of a 25 basis point rate cut.On Friday, Russian President Vladimir Putin said Russia will achieve its strategic goals in Ukraine, insisting that Russia is united behind the conflict. "Truth and justice are on our side," Putin said at the Victory Day parade on May 9. The entire country, society and people support the participants in the military action against Ukraine, "and this spiritual force always brings us victory." U.S. President Donald Trump previously posted on social media: "I hope both Russia and Ukraine can abide by an acceptable ceasefire agreement." "If the ceasefire agreement is not respected, the United States and its partners will impose further sanctions." Putin did not mention Trumps statement in his speech.According to Yonhap News Agency: A South Korean court rejected Kim Moon-soos request to confirm his status as the Conservative Partys presidential candidate.On May 9, Germanys new Chancellor Merz said that Europe supports Trumps plan for a 30-day ceasefire between Russia and Ukraine, and that both the EU and the US are ready to increase sanctions pressure on Moscow if Moscow does not take peace talks seriously. Merz added that the EU and the US will continue to support Ukraine and increase aid when necessary, although he said Germany continues to oppose financing defense spending through joint EU debt. "We call on Russia to finally embark on the path of real peace talks," he said. "If this is not done, we will not hesitate to increase sanctions pressure together with our European partners and the United States."Bank of England Governor Bailey: The global economic environment is likely to continue to be challenging and more unpredictable than ever before.

How to Enhance Your Moving Average Crossover Strategy

Aria Thomas

Mar 25, 2022 09:33

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Moving Average Crossover

The moving average crossover strategy is designed to locate the middle of a trend. A trend is defined as price movement in which prices move in a certain direction over time. In general, trends are either upward or downward, while sideways movements are considered consolidation rather than trends. Capital markets trade in tight consolidative patterns around 70% of the time and trend just 30% of the time. With this in mind, it is critical to be able to recognize a trend and capitalize on it as soon as it becomes apparent.

What Is the Best Way to Capture a Trend?

Short-term moving averages may capture short-term patterns. A moving average is the average of a specified time, and when a new data point is added, the first period of the average is discarded. A moving average crossover strategy looks for instances when a short term moving average crosses above or below a longer term moving average to create a short term trend.


For example, if the 5-day moving average of USD/JPY prices crosses above the 20-day moving average of USD/JPY prices, a short term trend may be in place. One trading strategy may be to buy USD/JPY prices when the moving averages cross over, hoping to ride an upswing in the currency pair. An investor may try to capture up, down, and sideways movement by combining a short, medium, and long term moving average.


Longer moving averages are used to capture longer-term patterns in a financial market. When the 20-day moving average of gold prices crosses below the 50-day moving average, as seen in the gold chart, a medium term trend is deemed to be in place.

Problems with a Standard Moving Average Crossover

The notion of a moving average crossover is appealing, but a basic issue is that while the market is consolidating, a moving average crossover will provide a lot of false signals. Between April 2014 and April 2015, the 5 / 20 moving average crossover provided 5-signals that did not forecast a trend. This does not imply you would not have earned money trading this strategy, but you would not have seen a big upward (or negative) bias in the currency pair.


One method to improve a moving average crossover strategy is to include extra research that will sift out some of the misleading signals. For example, by adding a Bollinger band (developed by John Bollinger - this research helps form a histogram of prices above and below a mean level) to the 5 /20 crossover strategy, you can also assist in defining a range.


In the instance of the USD/JPY, you could only buy the currency pair when the 5-day moving average crossed the 20-day moving average and the exchange rate crossed above the Bollinger band high (2 standard deviations above the 20-day moving average) during an x-day period. The number of days (x) is subjective, although a duration of fewer than three days is desirable. By adding another layer, the strategy becomes more resilient, but also less common.