Leading Commodity Trading Indicators

Moving Average Leading Commodities Indicators

A trader can choose a moving average based on the commodities trading chart time frame that he is trading; the trader might choose to use this Moving Average indicator on the minute charts, hourly charts, daily charts or even weekly commodity trading charts.

The commodity trader can also choose to average the closing commodity price, opening commodity price or median commodity price.

Moving average commodity indicator is a oftenly used indicator to measure strength of commodity trends. The data is precise & its output as a moving line can be customized to a commodity trader's preferences.

Using the commodity trading moving average is one of the basic ways to generate commodity buy and sell trading signals which are used to trade in direction of the trend, since the Moving Average indicator is a lagging indicator & a commodity trend following technical indicator - this means that it will tend to give late commodity entry signals as opposed to leading commodities trading indicators. However, as a lagging commodity indicator it gives more accurate commodity signals and is less prone to whipsaws compared to leading commodities indicators.

Commodity Traders select the moving average period to use depending on the type of commodity trading they do: short term commodity trading, medium term commodities trading and long term commodities trading.

• Short Term commodity trading: 10 - 50 Moving Average Period
• Medium-term commodity trading: 50 - 100 Moving Average Period
• Long Term commodity trading: 100 - 200 Moving Average Period

The commodity price period in this case can be measured in minute charts, hourly charts, daily charts or even weekly commodity charts. For our example we will use 1 hour commodities trading chart time frame period.

Short term commodity trading moving averages are sensitive to commodity price action and can spot commodity trends signals faster than the long term moving averages. Shorter term commodity trading moving averages are also more prone to whipsaws compared to long term moving averages and a trader should choose a commodity price period that will generate a commodity signal early but not give too many commodity trading whipsaws.

Long term commodity trading moving averages help avoid commodity trading whipsaws, but are slower in spotting new commodity trends and trend reversals.

Because long term moving averages calculate the average using more commodity price data, it does not reverse as fast as a short term commodity trading moving average and it is slow to catch the changes in the commodities trend. However, the longer term commodity trading moving average is better when the commodity trend stays in force for a longer time but may also give late commodity trade signals.

The work of a trader is to find a moving average period which will spot commodity trends as early as possible while at the same time avoiding fake-out signals (commodity trading whipsaws).