Moving Average Whipsaws in Range Market - How Do I Trade Indices in a Range Market?
The Indices moving average is a helpful and useful trade chart indicator to trade with when a trend has formed. However the moving average indicator is prone to fake outs when the price is trading in range market.
The Moving Average is prone to whipsaws during a ranging market because the price is volatile and keeps moving around the average, causing the Indices moving average indicator to give signals indicating upwards market trend and then quickly changing to give sell signals.
It is for this reason that the MA indicator shouldn't be used to trade Indices in a range based market.
Ranging Market & Whipsaws - How Do I Trade Indices in a Range Market
This is why it's best to combine this moving average indicator with other indicators when generating signals to trade with.
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