Trade Stock Indices

MA Whipsaws in Range Bound Sideways Markets Strategies

Range Markets Strategies

The indices trading moving average is a useful chart indicator to trade with when a indices trend has formed. However the MA technical indicator is prone to fake-outs when price is trading in rangebound market.

The MA, or Moving Average, is susceptible to generating misleading signals or "whipsaws" during periods when the market lacks a defined trend (range-bound) because price action exhibits volatility and constantly crosses around the average. This causes the moving average trading indicator to issue signals suggesting an uptrend in indices, only to abruptly reverse and suggest selling stock signals.

This is why you shouldn't use the Moving Average indicator to trade indices in a market that stays in a range.

MA Whipsaws in Range-Bound Sideways Markets Stock Strategy

Range-Bound Market and Whipsaws - How to Trade Stock Index in a Range Market

This is why it's best to combine this trading moving average indicator with other indicators when generating signals to trade indices with.

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