You’ve read the article, yes?
Now it’s time to dig into the details of why so many people use moving average patterns in their daily trading.
Before we dive into the specifics of why we use moving averages, here’s a quick review of how they work to calculate the moving average:
The moving average returns its moving averages as a number between 0 and 1. The higher the number returned, the higher the moving average.
Moving averages are calculated by adding the two last moves in a row to arrive at the moving average. If the two last moves are different then the difference is rounded up to a minimum of one. That’s called “subtle divergence”, as opposed to “simple divergence”, or “non-divergence”.
So if the highest moving average is 0-1 and the last move is 1-0, sub-divergence is subtracted from the moving average. Then the final moving average is calculated based on that difference and that one. Simple divergence makes the average 0-1, which is why this is the most common pattern we use in the trading world today.
Why do traders use moving averages?
There are several reasons why traders use moving averages. I’ve listed them in the order of priority.
Moving averages help keep our numbers aligned, and help maintain a stable trendline.
For traders who trade small, they help avoid market bubbles and help avoid losing a lot of money in a short period of time.
For traders who trade large, they make the average easier to understand, which helps to make the process of trading easier and quicker.
For traders who trade in multiple markets, they help maintain a positive, moving average trend.
For traders who trade on different exchanges, it helps keep their prices in alignment with each other, and avoids trading against each other.
Why are moving averages the best trading pattern?
Yes, my favorite trading pattern out there is the Moving Average Convergence Divergence!
Moving averages are amazing in so many areas. They’re the pattern that I use the most when starting out as a trader. They’re the pattern that gives me the smoothest, most effective movement throughout the year. The patterns that I use are those that maximize the number of small profit opportunities throughout the year. When you have a smaller number of small losses versus larger, larger, losses the patterns tend to converge. One other trend that moving average pattern has been shown
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