Leading Indicators

Choose a MA to Trade with Trading Strategies

A trader can choose a moving average based on the chart timeframe that he is trading: the Gold trader might choose to use this MA indicator to the minute charts, hourly trading charts, daily charts or even week charts.

The trader can also choose to average the closing price, opening price or median price.

Moving average indicator is a oftenly used indicator to measure strength of the trends. The data is precise and its output as a moving line can be customized to suit a xauusd trader's preferences.

Using the trading moving average is one of the basic ways to generate buy & sell trading signals which are used to trade in direction of the price trend, since the MA indicator is a lagging indicator & a trend following indicator - this means that it will tend to give late gold entry signals as opposed to leading indicators. However, as a lagging indicator it gives more accurate signals & is less prone to whipsaws compared to leading indicators.

Gold Traders select and choose the moving average period to use depending on the type of trading they do: short term gold trading, medium term gold trading and long term gold trading.

Short-term gold trading: 10 - 50 MA Period
Medium-term gold trading: 50 - 100 MA Period
Long-term gold trading: 100 - 200 MA Period

The price period in this case can be measured in minute charts, hourly trading charts, daily charts or even week charts. For our example we will use H1 chart timeframe period.

Shortterm gold trading moving averages are sensitive to price action & can spot trends signals faster than the long-term MAs moving averages. Shorter term gold trading moving averages are also more prone to whipsaw signals compared and analyzed to long term moving averages and a gold trader should choose a price period that will generate a signal early but not give too many whipsaws.

Longterm gold trading moving averages help avoid gold whipsaws, but are slower in spotting new trends & trend reversals.

Because long term MAs calculate average using more price data, it does not reverse as fast as a short term gold trading moving average & it is slow to catch the changes in the trend. However, the longer term gold trading moving average is better when the trend stays in force for a longer time but may also give late xauusd signals.

The work of a trader is to find a moving average period that will spot trends as early as possible while at the same time avoiding fake-out signals (gold whipsaws).

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Trade Gold Trading

Leading Indicators

Choose a MA to Trade with Trading Strategies