Tips on three moving averages of gold trading
A moving average can produce good buying and selling signals, but it also has many defects. If gold investors use the short-term (such as 5 days) moving average, the average will be very close to the market, and crossing will often occur. When the market is in the trading range, it is very easy to generate wrong signals, thus increasing the transaction cost and causing losses.
Among them, the 5th, 13th and 34th performed surprisingly well in many markets. Five day moving average, 13 day moving average and 34 day moving average are all exponential moving average.
If we look for buying and selling signals through three moving averages, when the short-term moving average crosses the medium-term and long-term moving average, there will be a buying signal, and when the short-term moving average crosses the medium-term and long-term moving average, there will be a selling signal.
Gold investors can use part of the funds to open long positions when the short-term moving average is above the medium-term moving average, and then add long positions when the short-term moving average is above the long-term moving average, or open short positions when the short-term moving average is below the long-term moving average, and close positions when the short-term moving average is above the medium-term moving average. The advantage of doing so is to avoid false signals and protect profits as far as possible. At present, one of the most popular three line cross combinations is the 5-day, 13 day and 34 day moving average.
Generally speaking, the long-term moving average system of gold price is relatively stable and the error rate is low. However, due to the slow response, the market has gone for a long time when the signal appears, so the profit margin is small. The short-term moving average reflects agility and has a large profit margin, but it often has more false information, that is, more false signals and lower success rate of operation, which often leads to stop loss.
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