In this tutorial, you will learn how to set up and customize multiple moving averages (MA) on a trading chart. Additionally, we are also going to cover a basic trading strategy using these moving averages. This guide will cover configuring two simple moving averages (SMA) and two exponential moving averages (EMA) with specific colors and periods.
Step-By-Step Guide
Step 1: Access Your Charting Platform
Open your preferred trading/charting platform (e.g., TradingView, MetaTrader, Thinkorswim) and load the chart for the asset you want to analyze.
Step 2: Adding And Customizing Moving Averages
Add The First Simple Moving Average (MA1)
- Locate the “Indicators” section.
- Search for “Moving Average.”
- Add a Moving Average to your chart.
- Access the settings for this MA.
- Set the period to 20.
- Change the color to Green.
- Save the settings.
Add The Second Simple Moving Average (MA2)
- Repeat the above steps to add another Moving Average.
- Set the period to 50.
- Change the color to Red.
- Save the settings.
Add The First Exponential Moving Average (EMA1)
- Locate the “Indicators” section again.
- Search for “Exponential Moving Average” or “EMA.”
- Add an Exponential Moving Average to your chart.
- Access the settings for this EMA.
- Set the period to 100.
- Change the color to Blue.
- Save the settings.
Add The Second Exponential Moving Average (EMA2)
- Repeat the above steps to add another Exponential Moving Average.
- Set the period to 200.
- Change the color to orange
- Save the settings.
Note: Adding and using multiple technical indicators on charts is a feature available on TradingView’s subscription plans (Essential, Plus, Premium and Ultimate). The free Basic plan allows only two indicators per chart.
Step 3: Understanding The Trading Strategy
Buying Strategy
The strategy treats it as a buy signal when the moving averages are in the following order from top to bottom:
- Green (MA1, 20 period)
- Red (MA2, 50 period)
- Blue (EMA1, 100 period)
- Orange (EMA2, 200 period)
This indicates a strong upward trend and potential for continued price increase.
Selling Strategy
The strategy treats it as a sell signal when the moving averages are curling up or not in the proper order. This suggests weakening momentum or potential reversal, indicating a higher risk of price decline.
Using Moving Average Order to Time Trades
By following this tutorial, you can effectively set up and customize multiple moving averages on your trading charts. Using the proper order of these moving averages can help you identify potential buying opportunities, while deviations from this order can signal potential selling points. Always remember to use additional indicators and perform thorough analysis before making trading decisions.
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