MA is a moving average which is a technical analysis indicator most used by traders in financial markets. However, most investors haven’t yet known how to exploit its full potential. Today, this article will show you how professional traders use MA indicator to make profits in Olymp Trade.
MA – The most used technical indicator by traders
MA is the moving average. It represents the average of the price series over a given period of time.
MA is a very popular technical indicator in financial markets. It is trusted by many traders. By relying on it, they can quickly and easily identify the trading signals.
Moving averages that are commonly used in Olymp Trade
SMA is a simple moving average calculated by the average of the closing prices over a given trading period.
EMA is an exponential moving average calculated by an exponential formula, which focuses on the latest price movements. Hence, EMA is quite sensitive to short-term fluctuations. It recognizes abnormal signals faster than the SMA which helps investors react faster. Especially, it is for short-term price movements or eliminating bad signals.
WMA is a weighted moving average. It will focus on the parameters with the highest frequency. This means that WMA will focus on price levels with large volumes, which means paying attention to the cash flow’s quality factor.
In this article, we will only mention the Simple Moving Average (SMA), which is also the moving average that professional investors often use.
How professional traders use MA indicator to effectively make profits
A typical trader would use MA indicator with the following 3 purposes:
- Predict the strength and weakness of the market
- Predict the trend reversal
- Guess the swing high and swing low of the price
For professional traders, they see SMA as a signal to open trend-following orders. Simply put, during an uptrend, when a bearish adjustment hits SMA (seen as the dynamic support level), there is a high probability that the price will bounce back.
Conversely, a bearish market will come with bullish adjustments. And when the price touches SMA (seen as a dynamic resistance level), it is likely that the price will drop again. From there, you can make safe and profitable decisions.
Instead of having to rely on static support/resistance zones, professional traders now have more flexibility to turn SMA into an extremely flexible bounce in a trend.
How to trade when considering the moving average as a “dynamic level”
Required conditions are:
The market is in an up or down trend.
A suitable SMA for the strategy (SMA30 – short term, SMA50 – medium term, SMA100 – long term).
The initial prerequisites for the strategy have been met. Now is the time to focus your attention on the market when it’s trending. This is to grasp a price bounce after each adjustment of the price to the established SMA.
Open UP orders when the market is bullish which is indicated by the fact that the next high is higher than the previous one and the next low is higher than the previous one. Be ready to open orders when the price touches SMA (dynamic support) as shown below.
Open DOWN orders when the price is in a downtrend by observing that the next low is lower than the previous low and the next high is lower than the previous one.
Is it possible to make a profit using MA indicator?
The answer is yes. Any of the technical indicators can benefit you from using them. What is most essential is to build a trading strategy around the selected indicator. Exploit the strengths and limit the flaws. In order to do that, it takes time to study, record, and carefully statisticize.
Do not think that just reading through this article, knowing a few methods that they (professional traders) use to trade, then you can make money for sure in Olymp Trade. My friends! Success is not that easy. It will be a long way from basic to advanced before becoming a serious (left-hand) job for you to make a living.
Let’s test this trading strategy on a Demo account right now. There, you will get valuable lessons and experiences without taking any risks. Don’t have the same dreams as the losers out there. You should focus on improving your skills, trading psychology and the profit itself will find a way to you.
Through the above article, have you realized the difference between you and a professional trader? They differ from you in knowing how to take full advantage of the indicators. This creates flexibility in the process of making profits in Olymp Trade. There is no “holy grail” here as the rumors say.
So, don’t waste time looking for it. Just go to your Demo account to practice and upgrade your perfect approach. From there, you can improve the transaction situation better and better as the profit is optimized.