Moving Average Whipsaws in Range Market - MA Whipsaws in Range Markets
Strategy for MAs Moving Averages Indicator - Range Markets Systems
Moving average whipsaw is a fakeout signal that is generated by the Moving Average indicator, when this indicator gives a signal in one direction - then the indicator quickly turns around and gives a signal in the opposite trend direction. This is called a moving average whipsaw signal.
The forex moving average indicator is a helpful and useful chart trading indicator to trade with when a market trend has formed. However the moving average indicator is prone to whipsaw fakeouts when the price is trading in rangebound market.
The Moving Average is prone to whipsaw fakeouts during a ranging market because the price is volatile and keeps moving around the average, causing the forex moving average indicator to give signals indicating upward trend and then quickly changing to give sell signals.
It is for this reason that the Moving Average(MA) indicator shouldn't be used to trade forex in a range based market.
Range Bound Market & Whipsaws - How to Trade Forex on a Range Market
This is why it is best to combine this forex moving average indicator with other indicators when generating signals to trade forex currencies with.
By combining the moving average indicators a trader will confirm the signals generated by the forex moving average indicator with the other indicators - if the other indicators give a signal in the same direction as the signal given by the forex moving averages then a trader can open a trade in the direction given by the moving average indicator & the other indicator used to confirm the signal given by the forex Moving Average.
By combining the forex moving average indicator with other indicators a trader can come up with a trading system that will help them identify which signal that is generated by the forex moving average is likely to be a forex whipsaw and which signal is likely to be more reliable.
One should only open trades if the signals generated by the forex moving averages are in the same direction as that which is indicated by the other additional indicators.
Good indicators to combine moving averages with are RSI & MACD technical indicator.
Get More Courses & Courses:
- RSI Swing Failure on Upwards Forex Trend and RSI Swing Failure on Downwards Trend
- How to Use XAU/USD MT4 Navigator Window Panel Tutorial Guide
- Gold Leverage Definition in XAUUSD
- How Do I Analyze MT4 Downward Trend-line on MT4 Platform Software?
- Calculate Value of 1 Pips for S&P ASX200 Index
- Bollinger Band MT5 Analysis in
