All indicators, as long as they are used, can effectively help you make judgments and increase the success rate of stock trading.
If I have to ask which indicator is king, my answer is average index.
This is not to say that this indicator is the best, but in my own practical application, the moving average has played a vital role.
We must first understand how the moving average comes from, how it is formed, and what the principle is.
The moving average of stocks is actually the average of closing prices for several days.
For example, the 5-day moving average counts the closing prices within 5 trading days and averages them.
10 moving average statistics 10 average closing price in trading days, and 20th, 30th, 60th,120th, 20th.
It can be seen that the moving average is actually the average price in a period of time, which can reflect the average transaction cost in this period in disguise.
Inferred from this point, the moving average itself plays an important role in cost accounting.
Simply put, the current price is higher than the moving average, indicating that the funds are floating during the period, and the price is lower than the moving average, indicating that the funds are floating during the period.
But one thing must be clear, that is, there is a certain deviation in the calculation of cost.
For example, the 5-day moving average records the closing price of 5 days, but the daily closing price is not the same as the average price of the actual transaction every day.
For example, the 5-week moving average records the closing price of 5 weeks, and the weekly price fluctuation leads to the actual average transaction price, which will have certain deviation.
From the cycle point of view, the price of the long-period moving average is actually closer to the actual cost of capital, while the short-period moving average needs to look at the time-sharing K-line, such as 15 minutes and 30 minutes.
Therefore, in order to accurately use the moving average, we must be able to accurately grasp the moving average under the K-line cycle.
Moreover, the strength represented by different EMAs and their significance to the operational level are completely different. People of different styles use different EMA.
It can be said that compared with other technical indicators, subjective parameter will is very important, which does not mean that all moving averages can effectively help investors make some technical trading judgments.
Let's talk about bulls and bears first, and then talk about the specific moving average period.
In the whole trend investment, the arrangement of moving averages is actually very important and effective.
The so-called long arrangement means that the stock price always runs above the average cost of funds, and the funds always have a certain degree of floating profit.
The short-term moving average is above and the long-term moving average is below, because the calculation method of the moving average determines the average value of the short-term stock price, which is greater than the average value of the long-term stock price.
In this case, the trading mentality of the whole fund is relatively relaxed and comfortable, and it will not face particularly great selling pressure.
But as long as the follow-up funds can effectively enter the market, the stock price will rise along the whole trend.
The so-called short arrangement is naturally the opposite of long arrangement. The stock price has been running below the average cost of capital for a long time, and the capital is basically in a state of floating loss.
The short-term moving average is below and the long-term moving average is above, because there will be selling pressure when the stock price rises, which cannot effectively approach the average cost.
Under the arrangement of short positions, it is a situation of killing more, but whenever the stock price approaches the average cost, a large amount will be sold out to suppress the stock price until the stock price is getting lower and lower, the selling pressure is passively reduced, and the buying is passively increased.
If there is no extreme short selling, the stock price will fall slowly in theory, and every rebound is a good opportunity to leave.
Behind the EMA is actually capital, and the intention of capital is definitely closely related to the average transaction cost of capital, which also makes the EMA itself a support and resistance to the stock price.
30 minutes of MA20. The 30-minute 20-day moving average is actually a 2.5-day moving average.
Because 30*20= 10 hour, the daily trading day is 4 hours, so the 2.5-day moving average is obtained.
The 2.5-day moving average is actually the shortest period for capital to flow in and out. The reason for this is that the inflow and outflow of funds follow the principle of T+ 1.
General funds enter the market, t days to buy part, T+ 1 day to buy part, T+ 1 day to sell part, T+2 days to clear the warehouse and leave.
It is a high probability event that funds are opened in batches. Funds need flexibility to make some intraday spreads, so they need to open positions.
This is also the first active entry and the last clearance. The shortest period is 3 days. If the transaction is excluded, it may be late or early, then the cycle of 2-2.5 days is the most effective.
Therefore, the 2.5-day moving average is the golden cycle of short-term funds.
On the daily line, the response to the 2.5-day moving average is obviously slow, which is of little value. Therefore, most funds will choose to watch MA20 for 30 minutes to distinguish the strong and weak watershed of short-term funds.
Of course, the error rate of this moving average also exists, because there are too many cycles and high uncontrollable factors.
If a large amount of funds enter the market in the short term, it will definitely affect the trend of this moving average.
For ultra-short-term investors, it is very valuable to refer to this moving average, and it is of great significance to pay attention to the direction of the moving average itself, especially when there is an inflection point in the direction.
5-day moving average and 60-minute MA20. The five-person moving average and the 60-minute MA20 are exactly the same in terms of time period.
It's just that the 60-minute MA20 cycle is more precise and precise. After all, it is an average price of 20, and the 5-day moving average is only the 5-day closing moving average.
There used to be a K-line slogan, "If you don't break it in five days, you won't sell it, and if you don't break it in five days, you will clear the warehouse."
Thus, the 5-day moving average is the watershed of short-term trend.
The reason why the 60-minute MA20 is more accurate is that the 60-minute MA20 price has better price continuity, and the displayed support level and resistance level are relatively more effective.
Take profit and stop loss of short-term funds are almost always operated with reference to this moving average, which is of great significance and is the main watershed after the 2.5-day moving average.
Some strong stocks, if they want to step back in the day, basically aim at the price of the 5-day moving average.
The importance of the 5-day moving average is self-evident. In practice, strong stocks step on the 5-day moving average, while weak stocks step on the 5-day moving average, which is the standard selling point.
When the funds reach a certain tacit understanding and consensus, the value of the moving average is reflected.
The 5-day line itself, or weekly line, has entered the field of weekly line level, but the value of weekly line is very small, which can only be regarded as an ultra-short cycle with great uncertainty.
20-day moving average. It can be said that among all moving averages, the 20-day moving average is the king level.
The 20-day moving average close to the monthly line is the inevitable reference moving average for all short periods.
Of course, many large funds will set the 20-day moving average to 18 in order to get ahead of others, so as to differentiate the price of an moving average and ensure a more effective moving average.
Almost all stock trend lines have the shadow of the 20-day moving average.
Because stocks need funds as a reference to form a trend, they need resonance points. The 20-day moving average is the average monthly cost of the main operation in the medium term, which naturally leads the way.
Before the start, many stocks will step back on the 20-day moving average to confirm the average cost-effectiveness of funds.
This move itself is technically meaningful, because it is necessary to confirm the selling pressure, wash the dishes, and prove that the funds have been agreed and ready to start.
The 20-day moving average is not only significant when stepping back, but also the directionality of the moving average.
When the 20-day moving average begins to turn to bulls and start to rise, it means that the funds bought this month have made an average profit.
In this case, it is easy to get out of the bullish trend.
When the 20-day moving average remains short and continues to decline, then the funds representing the admission this month are still struggling.
In this case, if there is not a lot of capital investment to reverse the decline, then there may be room for further decline in the stock price.
It is most appropriate to use the 20-day moving average to judge the strength of a stock's band period.
Therefore, many people also call the 20-day moving average the slow band dividing line.
In addition, when judging whether the stock price is oversold, the 20-day moving average will be used to compare with the current stock price.
If the 20-day average price and the actual share price exceed 20%, it means that the funds are floating 20%, indicating oversold, while 30% and 40% are substantially oversold.
Overinflation represents the funds entering the market within one month, with a large amount of floating surplus. For large funds, more than 20% is a good time to sell.
Using inflation, we can judge the selling point of extreme value, which is an excellent way to do a good job of high throwing.
This is also a more effective use of the 20-day line.
100 moving average, 20-week moving average. The 100 moving average, 120 moving average and 108 moving average are essentially 100-day cycles.
This cycle is about half a year, which is the operation cycle of medium and long-term main funds.
If you browse the trend bull stocks, you will understand the importance of the 100 moving average.
For some medium and long-term main funds, the entry and exit cycle is generally about half a year, usually two quarters of performance reports. Whether the performance expectation can be achieved determines whether to increase, reduce or even clear the position.
Therefore, this kind of moving average is usually regarded as a watershed of medium and long-term trends.
From the weekly level, the 20-week line is also very meaningful and valuable, which is more instructive than the daily line.
Therefore, these moving averages should be combined and cannot be isolated alone, because sometimes there may be subtle deviations.
One thing needs special attention. Behind the medium-and long-term moving average is actually a great expectation, perhaps the theme expectation, perhaps the performance expectation. For stocks that are not expected, there is no big cycle rise.
Simply put, there are some stocks that can only be a shock pattern. In this case, it is useless to refer to the 100 moving average.
The medium-and long-term trend line must be the stock corresponding to the medium-and long-term operation, and the medium-and long-term funds need to be consolidated accordingly.
Don't mechanically copy some ordinary stocks with medium and long-term trend lines, and the reference value will be greatly reduced.
October line. The last long-term indicator is actually the 10 monthly line.
It can be said that the October Line itself reflects the development of a listed company.
Because of financial reasons, the share price of listed companies cannot accurately reflect the value of a listed company, but the October line is ok.
Because 20 months has been a big cycle of nearly 2 years, the average share price during this period is close to the real value of a listed company.
Coupled with the consistency of the October line, it can generally reflect the embedded value of a listed company, which can span the bull-bear cycle.
Of course, for ordinary investors, the October line is of little reference significance, because it is difficult to really help investors judge the buying and selling points.
Unless you are a real value investor, there is no need to refer to such a long-term moving average to make a judgment.