All language subtitles for 9. How to Trade Based on Trend Following Indicators

Hello and welcome back to cryptocurrency trading masterclass by a wealthy education in this video,

we're going to talk about how to trade based on trend falling following indicators.

So the first indicator that we'll talk about is a moving average.

There is a whole list of types of moving averages.

The two most common are simple and exponential.

The simple moving average is an indicator that plot.

In so in might be, say, 20, so it'll plot the last.

Or the average price of the last 20 candlesticks, normally the clothes you can you can adjust it to

open and highs and lows and everything else, but 99 percent of the time, you're talking about the

clothes.

So it plots it like, you know, like a dot on the chart and then it connects it, so it becomes a line

much like a price chart.

This is simply the close of stellar.

30, 30 minute chart, so everywhere you see this market, like it closed there at that 30 minute time

frame there, at that 30 minute Inkerman, et cetera, et cetera, a simple moving average is the same

thing.

And then if you change it to 200, then it's just the average price of the last 200.

There is the exponential moving average.

Emma.

And that's the same thing.

So in equal, say, 20, so that's your variable.

It would plot the last 20 closer's.

But this has a mathematical adjustment and that puts a little bit more weight on each.

Time period, so like candle bar, whatever going forward.

So.

It makes it much more sensitive, it tends to move a little quicker in reaction because it puts more

weight like, say, maybe on the last five than it does on the first 15.

It's really the only difference.

So setting them up pretty simple, you go to the indicators and strategies and you can type in moving.

Moving average, and you can see there's a ton of them, but we're just going to worry about moving

average and moving average exponential.

So for shorter time frame trading, you tend to want.

Exponential just because it's a little quicker to move and you can see over here it listed and then

there are some lines.

So I'm going to change the price to bars.

Just so you can see, by default, it'll be nine.

So we'll leave that there.

But this one will change to.

20.

Maybe we'll make it like black or something that makes a little bit easier to see.

And you can see the difference, you can see that the nine, the average of the last nine prices tend

to move quicker than that last 20.

That makes sense.

There's more it's a much shorter time frame.

There are a multitude of ways to look at this.

People use it as a trend signal a lot of times.

So you can see with both of these trend up, trend down, trend up trend, kind of sideways, down,

up, up, sideways, down, et cetera.

That's the most common way to use it.

Some people will use a crossover signal.

So, for example.

You get a lower one, a shorter M.A and a longer Emma, and at the lower one rises above, the longer.

Emma, that suggests that the shorter term momentum is turning to the upside and you see it kind of

fan out over time.

That's a good sign.

Just as when it crosses to the downside, that suggests a downward trend.

Now.

Some people will even go so far as to.

Use a crossover system, so it crossed here, so on this candlestick, you would be a buyer.

And then it crossed here and on this candlestick, you would either get out or you would start selling.

This is one of those things that if you do it, you're going to experience a lot of small losses and

then occasionally you will see a bigger win like that.

And this is going to be especially true on longer term setups.

So.

Looking at Bitcoin cash, let's change this to the daily.

And again, let's change the bars just so we can see the indicators a little easier.

So in this one will use simple moving averages.

So you click on that and see that they're there, but I'm going to change the settings.

To the.

50.

You make that red.

And I'm going to change this one.

To the 200.

Let me make this black.

OK, so.

Average of 200 days worth of prices, average of 50 days worth of prices.

It's a simple moving average, meaning that it just takes the raw information.

Now that cross formed here and this is what is known as the Golden Cross.

And you can see when this works, it really works.

The short time frame in this case, 50 days breaks about 200 days and it just takes off like a rocket

in bitcoin cash.

However, you can see that it produces the occasional whipsaw.

And that's that's the problem with a moving average crossover system.

You have to be willing to accept several small losses for a huge, big trend following one.

Finance quoin.

So.

I'll go ahead and change this to bars again, just for simplicity, we'll go to the one hour.

Now, let's go back into you can you can also type in, Emma, if you want moving average exponential,

first thing pulls up.

And.

This is the nine and again, let's go back to the 20.

OK.

So you can see that it's a lot of back and forth, so the problem you run into, like I said, is if

you just trade just the cross'.

You could run into serious trouble, but when they work, they work for a very long time.

Otherwise what traders will do is just simply look at the moving average itself and just use that as

your directional bias.

Pretty straightforward.

No need to overcomplicated.

Let's go to the Daily.

And let's change this to.

That fifty two hundred.

Now, remember, we had the Golden Cross previously.

This is the death cross.

This is a very, very sign long term, that's the golden cross.

You can see the golden cross work there, the death cross, I mean.

It kind of worked, but not really the golden cross here definitely did the.

The problem is, though, if you wait for the cross, that's not until you get to this candlestick and

if you wait for, you know, so really, you would have only captured that much of that entire move.

So moving average crossover systems.

They tend to work better with investment.

You have to be willing to ride out that type of back and forth.

So those are trend following signals you can you can see or indicators you can see that this indicates

that we are going.

Hiya.

So let's remove that indicator and let's look at something called the DE.

Moving average convergence, divergence, now, this is whether or not the moving averages are squeezing

together or spreading out based upon the twelve and the twenty six, so it's essentially a moving average

system.

Some people will put moving averages on top of it.

It's probably overkill, but some people prefer that extra boost, if you will.

You can do the.

Signal crossover, you know, breaking above, just like you would with a moving average.

And that would have been an entry.

You can also use what they call the.

Zero line cross, so zero.

Right here, where the histogram goes green and red, meaning positive or negative.

So every time it turns green, you'd be a buyer, every time it turns red, you'd be a seller.

Some people wait for a signal line to cross to the downside or upside to be a seller.

So they might be a seller.

They're.

Just as they would be a buyer here, because we crossed over the zero line with a cross shortly before

it, and that's you know, that's one of those confluence things that makes quite a bit of sense.

And then finally.

You know, I'll go into stellar lumens here.

And I'll remove these indicators.

And I'll do the Mockbee over here.

So.

It's a little early to tell.

At this point, but it does look like.

We made a lower high here on the moving averages, well, we made a higher high here.

This is negative divergence, and what this means is when an oscillator this is part of a family of

indicators called an oscillator, when it fails to make a higher high while price does, that means

that it's diverging from the price and that means we may be running out of momentum.

So in theory, that is a sell signal and it did work.

At least so far, we broke the zero line, so we'll see what happens, the seller next.

Now, this is on the 30 minute chart, so you can only read so much into it because, again, you like

the idea of higher time frames, not lower for indicators as far as reliability notice, resistance

here, resistance here, resistance here, crossover here, bearish crossover.

So certainly the McGeady can be very useful.

You never want to really use them ACDA in a sideways market like this to produce a lot of false signals.

But if you get any type of significant swing, it becomes a much more interesting.

So in the next video, I'll throw out some examples in real life to show you exactly how you could have

used this in multiple instances with the moving averages and the Mac de.