Technical Intro: moving average (MA)
The Value of Technical Analysis
The reason technical analysis has value is that directional price moves are often sustained for a period of time allowing analysts to detect and profit from the change in price. Even though a technical analyst has many math-based tools to analyze price and volume movement, the process is ultimately an art in the study of human behavior.
Just as the meteorologist can never guarantee a weather forecast, a technical analyst can never be perfectly certain of future price movements since human behavior is involved.
Introduction to MA (Moving Average) from moomoo course:
Moving averages are calculated based on statistical algorithms. The average stock prices within a certain period are calculated and connected to form a line, which is the moving average.
Buy Signals:
The decline of a MA is gradually flattening, and when the stock price tops the MA from below, it is a buy signal.
A short-term MA on a rising trend falls near or below a longer-term MA, and when the short-term MA tops the longer-term MA, it is a timing to buy.
The stock price is moving above the MA, and the stock price suddenly drops but does not fall below the MA. When the stock price rises again, you can add to your positions.
Example:
Example:
The stock price is moving below the MA and suddenly plummets to far below the MA. The deviation between the stock price and the MA is now too large. The stock price is likely to rebound towards the MA, so it is a buying signal.
Sell Signals:
After an MA rises, it remains parallel or falls, and when a short-term MA falls below a longer-term MA, it is a signal to sell.
The stock price tops the MA but immediately returns below the MA, and when the MA continues to fall, it is a sell signal.
The stock price is lower than the MA and rises. But if the rise reverses below topping the MA, a sell signal presents itself.
The stock price rises sharply in a short period of time and the deviation between the stock price and the MA becomes very large. It is very likely that the stock price will fall towards the MA, so it is an opportunity to sell.
Example:
Example:
All investors are faced with three basic questions with their investments. What to invest in, when to buy and when to sell. Technical analysis provides a framework for investors to methodically select equities and pick times to buy and sell. Emotion, the investor's nemesis, is greatly reduced in these decisions since the investor can develop a list of "what and when" rules to follow. Rather than "buying and hoping for the best", technical analysts always know how much risk they are taking and know when to "get out while the getting is good". $S&P 500 Index(.SPX.US$ $Dow Jones Industrial Average(.DJI.US$ $Nasdaq Composite Index(.IXIC.US$
Disclaimer: Community is offered by Moomoo Technologies Inc. and is for educational purposes only.
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