How to Choose a Energies Trading Moving Average to Trade With

Choose a Moving Average to Trade With Energies Strategies

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

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

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

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

Traders choose the moving average period to use depending on the type of energies trading they do: short-term energies, medium-term energies and long-term energies.

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

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

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

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

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

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