50 Period Moving Average Strategy

A trader can choose a moving average to trade with based on the chart time frame that they use for trading; a trader might choose the moving average to trade 1 min chart, 1H chart, 4H chart, daily chart or even weekly xauusd trading chart.

A trader can also choose to average the closing price, opening price or median price - when choosing a gold moving average indicator.

Moving average indicator is oftenly used to measure strength of gold trends. Data of the moving average is precise & its output as a line can be customized to the preferences of a trader.

Using the moving average indicator is one of the basic gold strategies to generate buy & sell signals which are used to trade in the direction of the trend, since the moving average indicator is a lagging indicator and a trend following indicator. The Moving average indicator as a lagging indicator means that moving average will tend to give late signals as opposed to leading indicators. However, the Moving average indicator as a lagging indicator gives more accurate signals and is less prone to gold whipsaws compared to gold leading indicators.

Traders select the moving average period to use when trading with this moving average indicator depending on the type of gold method they use: short term, medium term and long term.

• Short term gold trading: 20 Period Moving Average Strategy
• Medium term gold trading: 50 Period Moving Average Strategy
• Long term gold trading: 100 Period Moving Average Strategy

The period of the gold moving average in can be measured in 1 min chart, 1H chart, 4H chart, daily chart or even weekly chart. For our trading strategy example we will use 1H chart period.

Short term moving averages are sensitive to price action and can identify trend signals faster than the long term moving averages. Shorter term moving averages are also more prone to gold whipsaws compared to long term moving averages.

Long term moving averages help to avoid gold whipsaws, but are slower in identifying new trends and reversals.

Because long term moving averages calculate the average using more price data points, the long term moving average does not reverse as fast as a short term moving average and it is slow to catch the changes or reversals in the trend. However the longer term gold moving average is better when the trend stays in force for a longer time.

The task of a trader is to find a moving average period that will identify trends as early as possible while at the same time avoiding fake out signals - gold whipsaws. As a trader you will need to first test different gold moving average periods before deciding which moving average period is best suited for your style method based on the results of the testing that you'll do using different moving averages.

MA Strategy

Moving average indicator is a trend following indicator that is used by traders for three things:

• Identifying the beginning of a new trend
• Measure the sustainability of the new trend
• Identify the end of a trend & signal a trend reversal

The moving average indicator is used to smooth out the volatility of price action. The moving average indicator is an overlay indicator and it is superimposed on the price chart.

On the moving average example illustrated and explained below - the blue line represents a 20 period moving average, which acts to smooth out the volatility of the price action.

20 Period Moving Average Strategy - 100 Period Moving Average Strategy Method

Calculation of the Moving Average Price Period

The moving average is calculated as an average of price using the most recent price data point - gold periods.

If a moving average uses the 20 period to calculate the moving average then it is known as to as a 20 period moving average, because most traders use the daily chart as the standard price period we shall just refer to the moving average as the 20 day moving average.

To calculate the 20 day moving average the price of the last 20 days is averaged - and the average is then updated constantly after every new price period closes. So after every new price period close is formed the average is then re-calculated afresh using the most recent 20 price periods, that is why this indicator is called a moving average because the average is constantly moving when price data is updated and re-calculated.