How to Make Money with the 50-Day Moving Average Strategy.

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The 50-day moving average is a major trend following tool which has proven effective and profitable to most traders. 

Traders who have noticed this profitability apply the moving average on varied time frames to make huge profits out of the asset markets.

The moving average works very well with almost all assets, be it currencies, stocks, commodities, metals, ETFs, crypto, and so on.

Ideally, the 50-day moving average usually acts as moving support or resistance and that forms the basis of its use in trading.

It can also be used with other moving averages such as the 200-day moving average to form a robust trading strategy to make money while trading.

Those two aspects form the 50-day moving average strategy, which we will use this post to discuss.

A. The 50-Day Moving Average as a Moving Support or Resistance.

The 50-Day Moving Average forms a very effective moving support or resistance.

Meaning, when the price hits the moving average, it may either bounce back or break the moving average.

If the price bounces off the moving average upwards, this MA will have served as a support.

On the other hand, when the price bounces off the moving average downwards, such a moving average will have acted as a resistance.

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The price breaking the moving average upwards makes it the new support.

If the price, however, breaks the moving average downwards, it makes such moving average the new resistance.

So how do you trade the 50-day moving average as a moving support or resistance?

Moving average as both a support and resistance

How to Make Money with the 50-Day Moving Average Strategy.

  1. Allow the price to break the 50-day Moving Average.

The first ever step of trading the 50-day moving average as support or resistance is allowing the price to break it in either direction.

The price trading above the 50-day moving average is considered a bullish signal.

If the price breaks the 50-day moving average downwards, trading below it, however, such is considered a bearish signal.

  1. Allow the price to retest the 50-day Moving Average.

Having the price cross to either side of the 50-day moving average is not just enough.

The 50-day moving average must be retested successfully before any entry.

But how is the 50-day moving average retested?

It is so simple.

Just allow the price to fall or rise back to the 50-day moving average and bounce back upwards or downwards, without breaking the moving average.

What do I mean?

Say that the price broke the 50-day moving average upwards.

You will allow the price to trade above and fall back to the 50-day moving average.

It must hit the 50-day moving average and bounce back upwards, severally, for it to be a valid buy signal.

If it breaks the 50-day moving average downwards, you have no business waiting to buy.

If the price had initially broken the 50-day moving average downwards, retesting will be done by allowing the price to trade below the moving average.

The price must then rise back to the 50-day moving average and bounce back downwards several times.

If the price breaks the moving average upwards, abort the anticipation to sell.

Allow the price to retest the 50-day Moving Average.

  1. Enter Buy or Sell Position.

Enter a buy position where the price had broken the 50-day moving average upwards and retested it successfully.

On the flip side, enter a sell position if the price broke the 50-day moving average downwards and retested it successfully.

  1. Adjust your Stop Loss.

Your Stop Loss for sell position should ideally be just above the closest swing high.

For your buy position, the Stop Loss should be just below the closest swing low.

  1. Exit Trade.

Exit your buy trade when the price breaks the 50-day moving average downwards next.

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You should also consider exiting your sell position when the price breaks the 50-day moving average upwards next.

Beware of fake outs though.

B. The 50-Day Moving Average against the 200-Day Moving Average.

The 50-day moving average can be used together with the 200-day moving average to generate trading signals.

Crossovers between the two moving averages are the major signal generators in this case.

Let us find out how simple trading the 50-day with the 200-day moving averages is:

  1. Allow the 50-day to cross over the 200-day moving average.

The iconic crossover between the 50-day and the 200-day moving averages is called the golden cross.

It is such a powerful crossover where the 50-day moving average crosses over the 200-day moving average either upwards or downwards.

An upward cross of the 50-day moving average over the 200-day moving average is a bullish signal.

On the other hand, a downward cross of the 50-day moving average over the 200-day moving average is a bearish signal.

It is advisable that the price is trading above the 50-day moving average or at least the 200-day moving average for a strong signal.

If you spot those conditions, then you can proceed.

Death Cross

  1. Enter Buy or Sell Positions.

Buy an asset showing a cross of the 50-day moving average over the 200-day moving average upwards.

You can sell where the 50-day moving average crosses over the 200-day moving average downwards.

  1. Adjust your Stop Loss.

Your Stop Loss for sell position should be just above the price top before the crossover.

For your buy position, the Stop Loss should be just below the price bottom before the crossover.

  1. Exit Trade.

Exit your buy trade when the 50-day moving average crosses over the 200-day moving average downwards next.

On the other hand, exit your sell position when the 50-day moving average crosses over the 200-day moving average upwards next.

Also Read: – 7 BEST FOREX INDICATORS FOR SERIOUS TRADERS.

Wrapping up on How to Make Money with the 50-Day Moving Average Strategy.

See how simple the 50-day moving average strategy is?

So many traders have used it to make huge profits trading.

Apply either or both aspects of the 50-day moving average strategy and grow your trading account big time.

Make sure to follow every detail for the best results.

Happy Trading!


*Risk warning:

The information provided does not constitute a recommendation to carry out transactions. When using this information, you are solely responsible for your decisions and assume all risks associated with the financial result of such transactions.
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Kenn Omollo is an investment writer and a business management consultant at Joon Online Limited. Reach him at - kenn@joon.co.ke

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