If you think Moving Averages (MAs) are boring, you may be using them wrong.
To make really profitable trades we have to trade with the momentum of the trend and the best way to see the trend is to watch your MAs.
You can calculate an MA on your own, but after you’ve done it once or twice, why would you want to?
They aren’t complicated, but how much time do you have to spend calculating averages? To calculate a simple MA, you go back over, say, the last 50 days of closing prices for a currency pair, add them all together, and divide them by the number of sessions/periods (in this case, 50).
To confirm your trend, often you want to calculate that MA out as far as 200 or 250 days, and that can get messy. This is exactly why I think MAs get a bad rap. They are time consuming and can be boring to do by hand.
You can do that for all your charts, but that is a whole lot of math you don’t need to do.
Traders have to lay in wait. You have to be like the lion, the ultimate trade hunter, to know when to pounce on your prey. But our lives are a lot more complicated than hanging out in the long grass of the savannah stalking gazelle.
I don’t know about you, but even though I make my living through trading; staring at charts all day, every day gets mind numbing. Plus, when we spend too much time in front of our charts, we start throwing our emotions into the equation and looking at tiny market shifts as something to act on, just because we become desperate for something to happen.
What happens when the lion shows himself before he’s in striking range of his prey? The prey has plenty of time to turn tail and run. The lion then has to expend huge energy if he still wants to take it down.
The same thing goes for trading. If you act too soon, the market can turn on you in a heartbeat, leaving you to make the tough call to get out fast and manage the loss, or stay in and potentially make a big mistake, bigger.
