Looking for a surefire way of making money on Expert Option?
In this article, I will show you how to use moving average indicators to successfully trade on Expert Option. Because let’s face it, it is hard predicting where the financial market is going next. Or is it?
But with technical analysis, all you have to do is pick a technical indicator, set up a few parameters and there you are, generating tradable signals automatically and consistently.
Someone somewhere might be wondering what are these technical indicators?
Well, this is a computer algorithm that leverages history and presents data of an underlying asset to forecast where the price might move soon. Being computerized means that such indicators are super fast and streamline the trading process on Expert Option.
As such, the moving average is one of the most popular technical analysis indicators adored by trading pros, for a good reason.
MA is simple both to set up and read signals. With that said, let’s look at how to use it to trade profitably on Expert Option.
What is the moving average?
Moving average indicators are a special set of technical analysis tools used to track price action of assets, show trend and to reveal market entry points
Moving averages are mainly used to display the average price of an asset at a specific period.
Say you are tracking price movements of an asset you intend to trade. To help you do that, you have to set the trend signals as either bars or candlesticks, whichever suits you.
And on your screen, there are 10 successive candles.
Now, the moving average will calculate the price average and show it at the candle 10 as follows:
Sum all the closing prices of all the 10 candles and divide the result by period, which is 10.
So, in a nutshell, the moving average calculates price averages by adding up all the closing prices within a specific period and divides it by the period to show patterns.
That’s how the MA indicator on Expert Option works.
Types of moving averages available on Expert Option.
On the Expert Option trading platform, traders have access to several types of moving averages. They include:
This is an MA indicator tracking price average over a specified period. This is the most popular moving average on Expert Option because of its simplicity and effectiveness.
- Weighted Moving Average (WMA) Indicator.
WMA, like SMA, tracks prices of an asset, but with one difference.
WMA puts more emphasis on the most recent prices of an asset. And for this reason, it delivers the most reliable price action predictions.
- Exponential Moving Average (EMA) Indicator.
Just like WMA, EMA puts more weight on the most recent price data points. That’s why it is also known as the exponential weighted moving average.
EMA is sensitive to recent price action than SMA, which takes an unspecialized approach to calculate averages.
- Smooth Moving Average (SMMA) Indicator.
SMMA works like SMA but with one differentiation.
SMMA data is smoothed out to reduce ‘price noise’ (random variations).
How to add moving average indicator on Expert Option.
Now that you have seen different types of moving average, the next step is to learn to add moving average indicators on your Expert Option trading chart.
To do this, follow the steps outlined below:
- Login to your Expert Option account and locate the Indicators icon at the top of your trading chart.
- If you don’t already have an expert option account, register here.
- Under the new indicator feature, select Moving Average.
- From the list, choose your preferred type of moving average (EMA, SMA, WMA, or SMMA; your choice). Now go ahead and specify the period to track, select the color you are comfortable with, and its width.
- Tap on Apply to add the indicator on your Expert Option trading chart.
Once you’ve added the MA indicator, you are ready for the next step.
How to trade successfully using moving average signals.
Right off the bat, you should be ready to open a trading position on Expert Option when you see the MA line crosses the price line.
Let’s look at Expert Option strategies in 2020 using the MA indicator.
- The moving average can be used to identify trends on Expert Option. To do this, plot only one MA indicator on your trading chart. When the price action is happening above the MA, that’s a signal of an uptrend.
- If the price action shifts to below the moving average line, brace yourself for a downtrend
Just like that, you have generated tradable signals. But not so fast.
This simplicity of MA comes with a price.
There will be too many false signals. You might end up falling for a false trend, thinking the market is rallying up when it is dropping.
How do you avoid false signals when trading?
To reduce the number of moving average false signals, most traders always combine two moving averages on their trading charts instead of relying on one.
Commonly used pair is the fast-moving average (10SMA) and slow-moving average (20SMA).
And based on their order of movement, convergence, and divergence, you can reliably determine if the market is in uptrend or downtrend.
Expert Option strategy 2020.
- When the fast-moving average is above the slow moving average that is an uptrend signal.
- As for the downtrend, the opposite hold, as in, the fast-moving average is below the slow ma.
With this knowledge, you can decide whether to go short or long on an asset on the Expert Option trading platform.
Moving average strategy 2 on Expert Option.
Additionally, MA can help you determine if the current trend you are following is about to reverse, or worse, end.
To do that, all you have to do is add two Moving Averages on your Expert Option trading chart and wait for crossovers.
Here, when the two moving average lines cross over each other, it is a signal that the current trend is about to change. As a result, you should prepare to capture a better entry position.
Be sure to use the intersection points between the fast and the slow-moving averages as your entry points.
Moving average Expert Option strategy 3.
Another way of forecasting on Expert Option is by using moving average as a signal for support and resistance levels.
Here’s what you should do:
- Buy when the price drops and tests the moving average line.
- Sell when the rises and touches the moving average.
One thing though.
This is not like your normal support and resistance levels. Because in some instances, the price might move a little bit past the MA before heading back.
Final Thoughts on Moving Average Indicators
Now that you learned how to make money on Expert Option using a moving average, it is your turn to practice.