Most investors may pay more attention to the stock price in stock trading, but they often ignore some important technical indicators, which are also needed in stock trading. However, the moving average is one of the important technical indicators.
First, the definition of moving average
1, what is the average?
The moving average is an important technical indicator, which is often used by investors. It is an average line obtained by dividing the sum of closing prices in a certain period by the period. If there are five trading days in a week, it is the average value obtained by adding up all the closing prices of these five trading days and dividing them by five. 10 and 20 are the same.
2. What are moving averages and different colors?
According to the selected parameters, the EMA has different functions and reactions. Commonly used parameters are No.5, 10, No.20, No.30, No.60,120,250. Commonly used colors are white (5 lines), yellow (10 lines), purple (20 lines), green (30 lines), gray (60 lines), blue (120 lines) and orange (20th). Of course, the color is not fixed, and investors can look at their favorite colors.
Second, the simple application of moving average
1. How to see the moving average in the trend chart?
(1) Adding EMA: It can be done in three steps. You can add EMA to the stock software interface, press the MA key and press Enter.
(2) Check the moving average
2. Which one is used for analysis?
The line reflecting the average price and trend in a time interval is called the moving average. Through the moving average, we can intuitively see the overall price operation in the past period of time. Each line contains different functions and meanings.
(1)5-day moving average (upside line): the upside line is an upward trend, and the stock price rising beyond the upside line will lead to short-term bullish. Similarly, if the stock price falls below the 5-day moving average, it will be short-term bearish.
(2) 10 moving average (market line): When the trading line is aggressive in intraday trading, if the trading line is broken by the stock price, it means that the band center line will rise, otherwise it will fall.
(3)20-day moving average (auxiliary line): it is mainly used to assist the 10 moving average, correct the price operation intensity and trend angle, and fix the price trend operation direction. When the price is higher than the auxiliary line, at this time, the mid-line market of the band begins to see more and the reverse is empty.
(4)30-day moving average (lifeline): Its function is to clearly reflect the mid-term movement trend of stock prices, and the lifeline has played a strong pressure and support role. The same is true for intraday trading. If the lifeline trend is upward, the stock price breaks through or is above the line, which means to be bullish or not bearish.
(5)60-day moving average (decision line): used to indicate the mid-term reversal trend of the price and guide the large-band price level to run in the preset trend. The basic main force attaches great importance to this moving average, which can play a great role in the medium-term movement trend of stock prices.
(6) 120 moving average (trend line): the function remains the same, that is, it points out the long-term reversal trend of prices and guides/guides the large-scale price band to run in the established trend. If the trend line is below the stock price, it may still rise in the short term, generally reversing at least 10 days.
(7)250-day moving average (annual line): The main layout is the moving average which is very important for long-term investment. It can reflect the general situation and performance of the company.
The function of each line is described above. In order to have better and more accurate results and answers, we must combine all the moving averages and consider them comprehensively.
3. What are the common forms of moving averages?
(1) Long position: It means that multiple moving averages support the stock price to rise, so you are bullish.
(2) Short-selling arrangement: display multiple moving averages to counter the stock price and be bearish.
(3) Silver Valley: When the short middle line passes through the long line, a triangle or quadrangle will appear below it, which is like a valley. The valley that first appeared after a long-term decline is called Silver Valley.
(4) Golden Valley: There is a valley behind the Silver Valley, which is often more secure than the buying point of the Silver Valley.