All language subtitles for 11. Golden & Death Crosses Are There Magic Moving Average Numbers

So are there some magic moving average numbers, like when we talk about that, we're talking about

timeframe.

There's some magic ones are the right ones to use, so to speak, and or some better than others.

And there may be a number of others, but there's there's no magic moving ones.

There's or moving average numbers.

There's sorry, there's no magical numbers around that or or a special time frame numbers.

Someone says they know the best numbers or whatever it might be or they have a great system.

You might want to be a little skeptical of that.

But there are some common time-frame numbers that, you know, are used.

A lot are talked about in the media and all that, too.

So you will hear these over and over again.

And there's one that really kind of stands out as for some of those very commonly talked about.

So it's good to understand what's going on with those.

They're not magical, but understand that there may be highly publicized and that how they can actually

impact our investments are securities that we're investing in.

So we think about the one that's really talked a lot about a lot is the twenty day moving average and

the twenty day moving average stands out because, you know, twenty days equals one month of trading

days.

So people are kind of trading period now to a 20 day moving average.

It could be a 20 minute moving average or 20 hour moving average.

Again, the time frames you can set based on your type of trading, how often you're trading a day trader

would have minutes and maybe an hour or hours versus somebody who's like me looking more at a month

of trading days, but as well as observed by the trading community, you know, so people know the twenty

day moving average and it's almost a self-fulfilling prophecy.

Right.

So because everybody's talking about, oh, something's happening.

It's coming close to the 30 day moving average.

So when a security, let's say, is trending, it's common that the twenty day moving average will work

like a like a support line.

You know, sellers will stop selling it when it's when it's reached.

You know, this is actually very common, you know, so it's like, oh, it's coming to the twenty day

moving average.

We don't think it's going to cross that.

We think that's going to be more of a support line.

So sellers will stop reaching and selling and they'll actually intentionally bounce off the bottom of

that support line and start going back up.

That's actually pretty common.

Less common is when the twenty eighteen moving average, you know, works like a resistance line at

the top where buyers stop buying when it's reached, you know, whether they're waiting for it to reach

at that top.

And they're like, oh, I don't think it's going to cross the twenty moving average.

So I'm going to, I'm going to now stop buying because we're coming a resistance level.

Now, if you're if you're charting and stuff has actual resistance to support levels, that's another

thing.

And maybe this is reinforced.

But I think there's a little bit of self-fulfilling prophecy where people just believe these things

and and they're like, well, OK, I'm going to I'm not going to sell when it gets down towards the

twenty day moving average.

But and I and I'm not going to buy I want to get to the top because I think it might break through that

twenty day moving average.

So not a magic number.

But understand, this is what you might hear in the media when they start talking about, you know,

a security approaching the twenty day moving average.

Now, there are other moving average numbers to another popular moving average numbers includes a five

day, which is like one week of trading and 50 day hundred day two hundred.

And and why are these popular?

Right.

Well, another popular because they're round numbers.

You know, they're not magic numbers and respect to at least the five day you could say well equals

one trading week or something.

But it's they're not magical in any in any manner.

But it does give us some financial news, something to talk about, you know, and maybe make up.

They make up, but talk about things that when these things interact together with these kind of popular

moving averages, like the dreaded drum roll, the dreaded death cross, the word of the death cross,

it's a real thing.

And I don't if it's it's not real statistical thing, but it's certainly something they talk about in

the media.

So a death cross is simply when the 50 day moving average crosses below the 200 day moving average.

That's the definition of a death cross, right.

50 day goes below a 200 day moving average.

So we would know that would be kind of like a cell type pattern or bearish pattern.

Now, there's no statistical advantage over any other crossing pattern.

And and actually, since it's got longer time periods of 50 and 200 days, you actually are experiencing

more lag, as we know from our previous lessons.

But traders recognize a death cross.

The media talks about it cross.

So it might be a self-fulfilling, fulfilling prophecy that, oh, my gosh, the death cross is happening.

Know we need to, you know, be aware of this, that prices are about to really go down because we're

going to cross this death cross on the death cross just happened, you know, so this is a terrible

thing.

Same thing with a gold cross.

So the opposite is when the 50 day moving average crosses above the 200 day moving average, that means

you're going to prices are going to go up.

So some see a death cross means a wider bear market.

A gold cross means a wider bull market.

It does mean that a shorter term moving average has crossed a longer term moving average.

And we know that means something.

And people trade on that and we can trade on that.

But it's not.

No, there's no guarantee, like, oh, OK, you know, things are going to get bad or things are going

to get really good, you know, depending on your point of view.

If we looked at the graphically, by the way, you know, this is what it would be, right?

It's you get your 200 day moving average and you have your death cross when it goes below and you have

your gold cross when it goes above.

Right.

So that's that's kind of how that all that all kind of works.

So it's the same thing.

It's just a concept.

But again, there's no there's no magical numbers with moving averages, but it can be self-fulfilling

as far as in the news media.

But one thing with moving averages, you know, to think about is there really good, powerful indicating

tools.

And you can use them in different ways.

You can use them as a primary indicator.

You can use them to confirm another indicator.

You can use them when prices cross above and below lines, you can use them when to moving averages

cross each other.

There are different ways to use them in different ways to incorporate them into our trading strategy,

and they're very established very well.

So that means lots of traders are using them.

So it can be a little bit more predictive that way too, as well.

So use them with other indicators.

But moving averages can be a really, really great way to enhance or be a big part of your strategy

in terms of technical analysis.

Now, later, we're going to talk about how to build these strategies and things together and how to

pull these different things that you're learning about together into some coherent strategies and things

and also how to trade around these things as far as, you know, how much money to invest, all that

that's coming up towards the end.

But right now, understand that a moving average is an indicator.

It's a tool.

It's another tool, your toolbox.

And it's a good tool to have.

It's a good tool to use.