🔥 What Are The BEST Moving Averages Settings For Day Traders and Swing Traders

Hello traders, Vladimir here from Home Trader Club. In this video, I want to talk about one subject that especially for beginners, um, is very confusing, and that's what are the best settings for the moving average indicator. Because if you search online, you would find so much information, so many articles, videos, free ebooks, you name it, talking about the best moving average setups, the best moving average settings, the best moving average strategy. While the moving average indicator by itself is commonly used, and it's a great indicator, fantastic indicator, Do I start to sound like Trump? But it's commonly misused due to the lack of understanding and the basic terms and the basic principles of the indicator itself. So in this video, I want to break down the settings. How should how and what should you be? Actually using, why, and what time frames, and in what market conditions. And also, I will, uh, in the second part of the video, I will talk about, uh, the common uses or common strategies using moving average in very specific, uh, market conditions that will give you the edge in terms of controlling your trades, riding established trends, and maximizing potential returns or profits from your trades trying to ride the trend based on the moving averages. So let's begin. Before the charts, big thanks to Eightcap Broker for continuously supporting our community and this very channel. And to continue and enjoy the amazing offer we have with 8K Broker, where you can get your access to Home Trader Club up to 1 full year, private mentoring sessions, uh, the trading strategies, all the indicators in our marketplace, and so much more, follow the link below this video in the description. So let's go to the charts. Before that, few words. If you have no idea who I am and what is my story and my journey and how did I— what did I go through until I reached the place, you can watch the video here telling my story and my history in the trading world. As you know, I'm an internationally certified financial technician. So everything that I will be sharing here comes, one, from a little bit of knowledge, two, from a little bit of experience, as I was also a former private capital trader, and mainly, mainly with a lot of mistakes done in the trading world. So I allow myself to share with you these very mistakes and hopefully To help you and avoid them. So what is the moving average? What are the different settings we have for that? What are the different moving average types we have for that? The moving average, as the name suggests, takes the average value of the X bars you are interested in and gives you the average value of this very number. Okay, so if you take moving average of 50, like this red line, it will take 50 of the recent bars or candle— candles, um, make the calculation and give you the output. If you take 100 moving average, it will do the same. 200 will do the same, just with 200 moving average, 200 candles, 200 bars that it will take And make the formula. There are different types. There is the simple, the exponential, the linear weighted, smooth moving average. The 2 most used moving averages are the simple and the exponential. While the simple— and here is the formula of the simple moving average— gives absolutely equal significance Uh, to each bar, the exponential moving average puts more value or more weight to the recent data. So, if you plot exponential moving average 50 and a simple one, the exponential would be closer to the prices simply because it gives more value to the recent, the closest we get to the last candle, the more value it will get or the more weight it will get in its formula. Which moving averages are the best? Honestly, it would be simply not as important. Take a look, just for example, this is the exponential the way you see it right now on the chart, this is the simple. It will be very, very not significantly felt when you use it properly. What do I mean by properly? Properly means or begins with the understanding that you cannot rely only on moving averages or only on any other indicators without combining your other analysis methods without the price action, without the analysis of sequence of highs and low, without supply and demand, and so on and so on. Indicators indicate, price dictate. That's the combination you would want to work with. And if you are able to combine these 2 methods, right? Indicators analysis and price analysis, technical analysis based not on indicators. And the combination would give you a more complete picture or more complete analysis, and therefore will help you to make better, uh, calculated trading decisions. Okay. So, what are the recommended settings? As a rule of thumb, I want to recommend you use the multiplication of 4 between the moving averages you work with. You don't need more, and what do I mean by that? If you use, for example, the moving average 10, then the next one should be 40 at least, right? Or 50, then 150 or 160 or 200. Basically at least 4 in between the next multiplier. Um, you don't need many moving averages because I see a lot of beginners traders, and I saw online tons of videos about it, like 10 more different moving average on different time frames, cross here, cross there. One linear moving average, one weighted, one singular, uh, simple, one exponential. It will give you nothing but a headache and confusion and wrong decisions. It's always easy to take something that happened, analyze it, and show it. But in real time, you need as simple as possible picture and as simple as possible conclusion. Without too many different changing factors. So this is what I would recommend, at least between the first and the last moving average you do. What you see on my chart are 50 and 200 with a multiplier of 4. In between, I have the 100, okay, just to show you that this 100 will not change much in the analysis you have only with 50 and 200. It just looks prettier, maybe, okay, but it will give you no real extra added value. So this is the first recommendation. Second, which moving averages should you use? 10, 20, 30, 40, 50, 100, 200? So the logic is very simple. The bigger the trend you are trying to analyze, the bigger the moving average it should be. If you are analyzing daily and weekly, uh, trend and the whole trend, then of course a 200 moving average would give you much cleaner view than the moving average of 10 Take a look for it. For the example, let's insert extra moving average and you would see. Okay, take a look on ten. Let's make it blue so you can see how it looks like. It's very noisy. Up, down, down, up, up, up, down, down. A lot of noise. A lot of confusion. So the bigger the trend you are aiming to analyze, the bigger the moving average better to be. Very simple. Very logical. Meaning on the higher time frame, especially when you want to swing trading, go with the moving average like 50 or 100 and 200. You don't need go with moving average like 400 or 800 because it will give you basically, from my point of view, unusable output. None of You, or I would— I should say most of you, are not going to, to ride the trend for, for years. So most of us, the traders, prefer the in and out as quick as possible. Yes, not always every day, but a few days, few weeks, maybe some months, but not more than that. It's very unusual, um, to do some investing as a trader. As a trader, you want to trade in, out, out, in, right? Um, as an investor, you want find something and ride with it. Well, that's different story. Then you don't need these indicators. It's a different approach. So this is for the swing trading. If you want it on the shorter term trading with smaller trends, with quicker price changes, I would recommend going with moving average like 10 and 40, 10 and 50, okay, or 20 and 100, for example. Again, it will not significantly change it. Take a look, if I go instead of 10, I do 20, and instead of 40, I do 100, okay. The trend will be pretty much similar. It will—it's not going really to change much of the understanding I have. So if I use 1040 or 1050, doesn't matter. With multiplier of at least like four, you will get the same output. And remember, you don't need to rely only on indicator. You want to rely on both the indicator and the price. So. After understanding that, what, what's important to understand here— I see so many videos, uh, and recently I saw also some articles, never, never mind where, with— sorry I'm saying it, but for me it was very funny, uh, combinations: moving average of 11, 28 or 29 it was, then 40, 47 or 48, and stuff like that. Everyone is trying to, you know, invent the wheel, um, bring up something that they think they invent something, but in reality they invent nothing. It's— it will give zero difference if you use it 50 or 48 or 47 or 20 or 22. So go with the round numbers, they are great. Proven, and you know, don't need all these little twists, um, which makes absolutely no sense. Okay, stay with the basic logic. There is a reason why among, uh, traders, 100, 250, 10, and 20, they have value in analysis, and all that, all the rest is just made-up stories. So, um, if you think about it, why these numbers make sense? 20 or 24, it's close to the number of hours you have per day, right? The 100 would be close to the hours you have per week active. Again, a bit more, a bit less, don't— do not change much. But that's where the logic comes in. So when you want to analyze, uh, in a one day versus the full week, for example, 20 and 100, it will give you some sort of a picture that will be cleaner and easier to understand how a specific day is compared to last week. Okay, just to give you an idea, when you go with 200 moving average, you are looking on a daily chart, for example, you are looking in a scale of like an annual trend because after all the holidays, days off, banks off, weekends, and so on and so on, We have 365 days a year. Cut the weekends, cut all the times off and the non-volatile summer usually, and the holidays season and so on. So you get closer to the 200. Okay, again, a few, a bit more, a bit less will not change much, but it will give you much longer, almost annual view, observation on a trend. So these numbers make absolute sense behind it. Okay, uh, so after we break down the logic behind it and what to do, what not to do, um, for— I would once again want to repeat, for short-term trading, you can, like 1-hour chart or even 15 minutes, you can use 10, 30, or 40, doesn't matter. 20 and 40, 20, 50, um, 20 and 100, right? Even though from my point of view personally, 100 is a little bit too much for day trading. So 10, 40, 10, 50, or even, uh, like you wanted different combinations, fine. But these are the pretty— the numbers you want. The longer, uh, uh, trend scan, use the 50, 200, want 100 as well, fine, but 15, 200 will give the most important value and the midterm trends and the longer-term trends. Okay, uh, so that's about the settings behind the moving averages. Now I want to show you some common uses you can have with this indicator And how you can simply look to join the trends and also how you can trade alternatively. But before the strategies, I would like to invite you to our trading family, the Home Trader Club, where you will be able to get your access to very comprehensive, full, complete trading courses which you will be able to find here inside under the section of education. You have parts for the beginners, you have videos for the advanced which are also spread in the media zone, you have courses there inside. You would be also able to enjoy our trading, real-time trading education and trading opportunities shared with you in our dedicated trading channel where you will be able to find the videos and of course the detailed trading journal that you will be able to find anytime here and in our dedicated Telegram group. Besides that, you would get your access to our weekly videos, educational videos, market analysis, comprehensive detailed explanation on all the trading activity. You would be able to watch all the webinars, educational webinars on tons of subjects Including the cycles, the divergences, candle patterns, price action, and way so much more. So that's another thing you have. You would also have a lot of trading tools you would be able to find inside, and of course access to our community. So join our family with the link below this video in the description. I hope to see you with us. So the moving average once again is absolutely phenomenal indicator. If used correctly, like any other indicator. Because you know what they say, the trend is your friend, and it's absolutely correct. The problem is these trends, like you see here on the DAX, for example, now, or the gold, are not very popular and very common. I would say 20-30 estimated percent of the times you might be able to join a trend. Most of the times though, you would be facing such conditions, okay? Or such conditions, or such conditions, or such conditions. So to find very clean trends, not so common. So the trend is your friend, it's absolutely true until the end. And usually we tend to find clean trends and the aha moment, the wish to join, the wish to ride when it's getting a little bit too late, right? Sounds familiar? That's at least what happened to me many times when I was trading at the beginning of my journey. So it's important to understand. However, there are also very clean uses. Let's take a look at the German DAX, for example, as it has a beautiful trend right now. Um, when the moving average lined perfectly, the 200 points up and the slope is healthy, the 50 points up and the slope is healthy, these— and also, of course, you are able to say the market has sequence of higher highs, higher lows. Okay, when that sequence happens and the moving average lined up perfectly You don't need to be genius to see that. It's visible. It's clean. When it's clean, that's when you will want to trade. You don't want to trade when it's not clean using the moving averages. Okay, and that's a mistake a lot of traders do. They force. But here is a cross. But here is something. But there is no clean trend condition, and yet they try to. Force the moving average usage. Maybe the moving average is the wrong indicator to use in that case. Think about it. It has to be used when it's really clean, when you don't have too much doubt analyzing that. So when the sequence of the highs and lows is placed properly and it's lined up with the indicators, the moving average in that case, this is the classical time to go and to look to trade. One of the ways I personally love to implement for the analysis, uh, when I look to join a trend is, uh, and I use mostly the 200 and the 50 in that case, I am looking at a condition when the price goes to, like, after a trend, retest the 200 or even below that, and after that goes again above it and above the 50. That's the time when I love to combine the cross of the MACD indicator. If you don't have your MACD, download the, uh, the our MACD with the link below this video in the description. Uh, we— when the cross happens, this is a classical time because we bounced off the trending condition. Look at that sequence of highs and lows. Correction to the downside. Boom! Bounce back to the trend. And now the cross happens. Both moving averages lined up and the MACD crossing the negative to positive. Then the same story and another cross take place. Okay? And we go negative again here and again positive cross. These are classical signs that will give you the understanding that okay. This is a beautiful back to the main trend with the moving average and with the MACD. MACD is also 2 moving averages crossing each other, but the advantage there on the moving average of the MACD is that it is basically 2 moving averages against another moving average creating some distance, and they are much shorter terms. So the short-term momentum with the longer-term analysis gives you the opportunity to join the trends. This is one use. The second use is from narrow conditions to explosions. For example, we already saw before here that this trend is ongoing, right? So if you go to the lower time frames and try to find opportunities, these conditions— you see when it's getting them to moving average, they're lined up perfectly. Perfectly, but look at this condition. They come back to Italian and they go narrow, narrow, narrow, narrow, narrow, narrow, narrow, right? You see, they are still lined up perfectly, but narrow here and here. And then the MACD makes the cross. The moving average making the open up and make the distance. The moving average here again making up open the distance, and the MACD crossing from the negative to the positive and creates a classical opportunity to ride. The reason, by the way, this is something I personally— a technical sign I personally love is simply because you got usually great risk-reward ratios. When you are riding the trend, usually your risk in that condition or that condition, right? Because you are riding the trend, so the reward might be significantly bigger than the risk you have. And many times it allows you to add on and add on and add on ongoing established trend until there will be signs against you. So these are the common uses I love to combine on moving averages. There is one more, and for that I'll go on the EUR/USD, for example. And here, the way I love to work with that is a little bit more complicated, but after that ride happens on the moving average, I'm looking— because nothing rides forever, right? It always gets far from the moving average and then gets returned, then continue or trend change. So after the ride happens, I'm looking to get inside the moving averages, and the way to do that is basically measure the distance. Look what happens here. The price goes below the 200 moving average, then at some point The moving average crossed to each other, right? So from the point where the moving average crossed the 200, and then the cross of the moving average happened to the downside, measure how much it goes to the downside. You can see here 500 points continues like 600 points, and then what you want to do is to check and compare. Similar cases on the same time frame from the recent historical cases. So where were the cases where the moving average crossed and then the price crossed and then the moving average happened? Here, that was around 300 pips, right? Then the moving average crossed. And here, look at this, right? But look what happens here. Price crosses, right? Crosses to the downside below the 200 moving average, then the moving average lined up. So this is the first move, about 200 points before we return the moving average. That's the next move before we return to the moving average, about 300 points. That's the next one, about 500 points, right? That's the next one before we return to the moving average, that's around 450 points. That's the next ride, like 700 points. Next ride 700 points. So we understand that starting from the significant moves, starting from 400 points, it starts to be very significant. 400 towards the 600, 700 create a significant pressure for the prices to go back to the moving averages. So what I like to do is to measure this exactly from this moment here. 400 points already significant, right? And the lower we go, the bigger the pressure becomes. So I know that this zone here starts to be very significant area and we are very likely going to return inside. Okay, so how do I look to trade it? First of all, I am waiting to see where there will be bullish signs on a daily chart and it starts with moving average divergence. When the moving average divergence starts to build up, this is the first sign for me, look for this opportunity. If you have no clue about the MACD and everything, I really recommend watching this video explaining more about the MACD, of course, and also this video here about the divergences and divergences tips, how to work with that. So once that happens, right, and the moving average Divergence comes in play. I love to go to the lower time frame. It could be four hour or even the daily. Let's go here because the moving average now are smaller, right? Now I'm not going to use because I'm looking to go trend against the trend into inside the daily moving average. So I'm looking on a shorter trend. And as you know, fifty to hundred are relevant for longer trends. 10-20 versus 40-50 would give us more value on the shorter term. So in that case, I have here 10 and 50 just for it. Use 10-40, no problem. Okay, um, use these combinations but on the short-term trend. And what I love to do here is I love to see where the crosses happen To the opposite direction. So the bullish divergence we saw on the daily chart, here is a bullish divergence on a 4-hour chart as well. And that's where I love to see now moving average crossing. As soon as it crossed, that's my moment like, oh, okay, fine. It's ready to look for the buy opportunities. And then what I like to do is either with the same 4-hour chart or even on the 1-hour chart, preferably in 1-hour chart because remember we love to work with short-term trends. We are looking to get inside the daily moving average distance once again, so the shorter would make much more sense to us. So when the 4-hour and mostly after the bullish divergences as we saw When they cross up and we have the combination of 4-hour and a daily chart on moving averages, 4-hour and 1-hour chart— sorry, daily and 4-hour chart on the divergences, 4-hour and 1-hour on the moving average indicator, the combination— that's my time just to look for these crosses. As I said before, this and the MACD. So this is missed opportunity because that's where the 4-hour chart made the cross. But the next one is here, right? That's the zone we got in again. We got very narrow and the moving average crosses— sorry, next candle right here. That's the sign that we can look for the buys. Then again, we get very narrow And the moving averages crosses right here. When you can enlarge that, so it will be a bit easier. Here, that's where the moving average cross. Okay, so we cross the moving average while they are holding. We are already lined up with the four-hour and the daily analysis, and this is where our opportunity is. Okay, so that's a little bit, uh, different approach against the trend, but very efficient once you spot the distance on the daily chart properly. And then on the lower time frame, you look for these opportunities. Of course, here all this time is irrelevant because the moving average not lined up properly for you. But at that point, they start to line up once again, and the same logic implemented again and again. You are looking for the moving average to get narrow again. Of course, the 4-hour and the daily have to be lined up, right? And then the moving average cross with the MACD, getting narrow, boom, cross with the MACD. And that's your opportunities to join the momentum and to ride it towards the moving averages on the daily chart. So these are the 2 common uses I personally love to include in my analysis when I'm analyzing the longer trends and basically just trying to understand, are we joining an ongoing trend? Or are we looking to trade against it? Until when, where from? Okay, all that is explained in this video. So that's it, guys. That's the settings I recommend to use and the reasons why I recommend to use these settings for the shorter and for the swing trading. And of course, these the trading approaches how to Write them well. I hope you find value in this video. If you do, please don't forget to hit this like button. Please consider to subscribe with the subscribe button below this video if you are new to our channel. Thank you very much for your time watching this video. If you have any questions, don't hesitate to ask in the comments, of course. And I want once again to invite you to our trading family, the Home Trader Club, and enjoy your access to our courses, the real-time trading opportunities, real-time trading education, and so much more value we have to offer you. Or join free with the, the offer we have with Eightcap Broker. So, um, once again, thank you for watching. Best to you and yours, and I'll see you soon with more. Good trading. Bye for now. Bye for now.