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I get often asked about the best moving average and how to use moving averages the right way. In this article, and in the video above, I provide the most important tips when it comes to using moving averages the right way.
EMA vs SMA
First, it’s important to realize that the difference between the EMA and the SMA is not significant. I plotted the 50 period EMA and the 50 period SMA on the chart below and you can see right away that the two moving averages are mostly very close together.
Thus, obsessing about which type of moving average is better is a waste of time – especially once we get into the other points shortly.
Learn to deal with imperfection
This is THE most important principle when it comes to using any trading strategy successfully. Sometimes, the EMA will work. Sometimes, the SMA will work. Sometimes, both may work. And other times, none will work.
Most amateur traders will go broke because they try to achieve a winrate of 90% or 95%. Am...
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