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Moving Average Whipsaws in Range Market

The MA is a useful indicator to trade with when a trend has formed. However the indicator is prone to whipsaws when the price is trading in range market.

 

The MA is prone to whipsaws during a ranging market because the price is volatile and keeps moving around the average, causing the indicator to give signals indicating upward trend and then quickly changing to give sell signals.

 

It is for this reason that the MA should not be used to trade in a range based market.

Range Market & Whipsaws

Ranging Market & Whipsaws


This is why it is best to combine this indicator with other indicators when generating trading signals to trade currencies with.

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