Trade Forex Trading

MA whipsaws in sideways markets - Trading indices in range markets

The Indices Moving Average (MA) is a practical and beneficial chart indicator when a clear price trend has established itself. However, the moving average (MA) technical indicator is susceptible to false signals when the price action is confined within a trading range.

During periods of market ranging, the Moving Average is susceptible to false signals because price volatility causes it to oscillate around the average. This leads the Moving Average (MA) indicator for indices to issue buy signals followed immediately by reversals to sell signals.

This outcome is precisely why the Moving Average (MA) indicator should not be employed for trading Indices within a consolidating market.

Trading Indices During Range-Bound Market Conditions - Utilizing Moving Average (MA) Signals in a Non-Trending Market

Ranging Market & Whipsaws - How Do I Trade Indices in a Range Market

This fact underscores the importance of supplementing this moving average indicator with other analytical tools when generating trade signals.

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