A simple trend determination is based on the position of quotes relative to their average values. Therefore, the SMA indicator is simply irreplaceable in determining the current trend.

About what types of moving averages exist and a short lecture on their use, recorded in the explanatory video for the indicator, published in the MA settings window of the trading platform:

In addition to the video, common strategies using various types of moving averages with other indicators, from simple to advanced, are clearly and briefly published:

Unfortunately, the moving average does not allow the trader to understand when to enter a trade in the direction of the trend. For this, many traders use the CCI oscillator.

The idea is simple - to determine the trend using the moving average, enter using the method of crossing the +100 level of the CCI indicator curve.

Indicator settings

The following three questions that arise when creating any trading system:

Working timeframe;

Indicator settings (indicator period, type of the used moving average in the strategy);

Position holding time (option expiration);

A lot of controversy arises around the selection of the type of moving average. It is believed that a simple moving average gives a lot of false signals in flat areas, other types are distinguished by the presence of weight coefficients that give the latest data a more significant value. The absolute winner is an exponential moving average, where the influence of the nearest averages grows exponentially.

"Natural selection" left without controversy the use of moving averages of "investor periods" 50, 100 and 200. They are used by analysts in reviews, and are still in the trading terminals of portfolio managers. Let's build a simple moving average with a period of 50 in the trading platform:

The indicator settings are aimed at determining the trend: CCI with the parameters period 14 and SMA with the period 50:

Uptrend

A signal about the beginning of an uptrend is received when the candle is crossed and closed above the SMA line, the CCI reading should be more than 100.

The figure below shows the signs of the beginning of an uptrend: the price crossing the moving average and closing of quotes above this line (1). It remains to wait until the CCI indicator shows a value of 100 or higher (2). With this method, traders prefer to buy options 3-4 candles ahead.

Downtrend

If we are getting ready to buy a Put option, it is worth waiting for the coincidence of the intersection of the SMA line from top to bottom with the candlestick closing price below this line and the CCI indicator reading below 100, as shown in the figure below. The intersection of quotes with SMA took place earlier, we do not enter, we wait for the condition from CCI to be fulfilled, having received it at point 2, we keep three timeframes (3).

The problem of subsequent purchases of binary and turbo options along the trend is solved as follows. One intersection is one trend, therefore, despite the fact that at point 4 of the situation we are analyzing in the figure above, a situation arose of finding quotes below SMA and a newly emerging signal of the CCI indicator below 100, which had previously risen above this level, we enter such a position we do not produce.

Indicator periods

Can this trading method be scaled to different timeframes? Classic usage involves applying the CCI + MA method on daily candles. Considering smaller timeframes, we change the period of the moving average: for four-hour candlesticks it will be 100, for hourly and below - 200, the period 14 for the CCI indicator remains unchanged, if you want to experiment, you should not look for values of this period above 24.

Newbie traders try to find the ideal values for indicators and systems by searching or studying the literature. They are not alone in this, investment institutions and funds order the same formulation of problems for mathematicians, creators of new indicators. The grail has not been found to this day. There is an understanding of the existence of cyclicality in market changes, but its parameters are constantly changing. It has not yet been possible to reflect this change, as well as to describe the law of its functional dependence on something. Use the period values in the books of the classics of trading, because they work in most cases, coinciding with the market cycles.

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