I’ve been playing around with adding 2 moving averages to create a crossover buy or sell point. This is by no means a new idea, but something that varies from person to person since you can create any moving averages you want. I am using a 20 day Simple and a 30 day simple, based on a 2 day/3 minute chart in prophet charts.
It’s a strategy that can be combined with breakouts very nicely (many times the breakouts will confirm the move).
It’s a lagging indicator, as most are, so you need to take into consideration other trends such as:
1. what is the overall market doing
2. you don’t want a lot of volatility before your entry point. The moving average will still be lagging and might not be very accurate for an entry point
3. you want slow steady trends. Sideways price movements with no volume are too choppy and won’t generate good crossover points.
Just some suggestions. Here are 3 charts that failed to produce using this method. Notice how the down side is VERY limited. That to me is more important to how much up side potential there is.
