Leading Technical Indicators - Choose a Moving Average to Trade XAUUSD With

A trader can select a moving average based on the chart time frame that he is trading: the trader may select to use this Moving Average indicator on the minute charts, hourly charts, day charts or even week charts.

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

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

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

XAUUSD Traders choose the moving average period to use depending on the type of xauusd trading style they do: short term xauusd trading, medium term xauusd trading and long term gold trading.

• Short-term xauusd trading method: uses 10 - 50 Moving Average Period
• Medium term xauusd trading method: uses 50 - 100 Moving Average Period
• Long term xauusd trading method: uses 100 - 200 Moving Average Period

The trading price period in this case can be measured in minute charts, hourly charts, day charts or even week charts. For our example we will use 1 hour time frame period.

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

Long term xauusd moving averages help to avoid xauusd whipsaws, but are slower in identifying new trends and trend reversals.

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

The work of a trader is to find a moving average period that will identify trends as early as possible while at the same time avoiding fake out signals (also commonly known as xauusd whipsaws).