Article Moving Average Envelopes:- Refining A Popular Trading Tool

T2W Bot

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Moving averages (MA) are a popular trading tool. Unfortunately, they are prone to giving false signals in choppy markets. By applying an envelope to the moving average, some of these whipsaw trades can be avoided, and traders can increase their profits.
What Is an Envelope?Moving averages are among the easiest-to-use tools available to market technicians. A simple moving average is calculated by adding the closing prices of a stock over a specified number of time periods, usually days or weeks. As an example, a 10-day simple moving average is calculated by adding the closing prices over the last 10 days and dividing the total by 10. The process is repeated the next day, using only the most recent 10 days of data. The daily values are joined together to create a data series, which can be graphed on a price chart. This technique is used to smooth the data and identify the underlying price trend.
Simple buy signals occur when prices close above the moving average; sell signals...

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