Leading Stocks Indicators

Choose a Moving Average to Trade With Stocks Trading Strategies

A trader can choose a moving average based on the stocks chart time frame that he is trading: the trader might choose to use this Moving Average indicator on the minute stock charts, hourly stock charts, daily stock charts or even weekly stock charts.

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

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

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

Stock Traders select the moving average period to use depending on the type of stock trading they do: short term stock trading, medium term stocks trading and long term stocks trading.

• Short-term stock trading: 10 - 50 Moving Average Period
• Medium-term stock trading: 50 - 100 Moving Average Period
• Long-term stock trading: 100 - 200 Moving Average Period

The stocks price period in this case can be measured in minute stock charts, hourly stock charts, daily stock charts or even weekly stock charts. For our example we will use 1 hour stocks chart time-frame period.

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

Long term stock trading moving averages help avoid stock trading whipsaws, but are slower in spotting new stock trends and stock trend reversals.

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

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