Trading 101: Moving Averages and Patintero
Trading or Investing in stocks is like playing Patintero.
It's all about the lines.
Taken from en.wikipilipinas.org
When I started trading stocks, i didn't know anything about candlesticks or patterns. And though I did my best to learn them, as a newbie without a mentor, I got frustrated halfway. I tried listening to the words of the 'enlightened ones' or gurus - sometimes it helped, sometimes it didn't.
Starting out, my only trading system was "Buy and Pray."
It's funny when I think about it now.
But hey. Later I found out a better way of trading - Following "The Lines."
And these lines became my trusted friends in trading. The Moving Averages.
These are my linemen. You can customize your linemen the way you want.
Red Line = 30 MA
Pink Line = 60 MA
Blue Line = 90 MA
In Simple words:
When your "linemen" are above the candles, the trend is down.
When your "linemen" are below the candles, the trend is up.
In Patintero, once a lineman catches you, you're out! Period.
In stocks, I can choose which lineman tells me when I'm out.
Example:
Because No matter how fundamentally solid or trashy the stock,
it is emotions that drive the price.
Additional Notes:
+ Moving Averages works well with Blue Chips, some 2nd Liners,
but rarely on 3rd Liners (should be jockeyed).
+ When you use MAs, you need to have patience.
+ My current linemen are 20/50/100 MAs.
+ "The trend is your friend."
+ Always consider how many of your linemen are on your side.
Ask these questions:
x - How many are below/above the candles?
x - Which MA is bullish/bearish?
Source: Trading 101: Moving Averages and Patintero - by ZeeFreaks (zeefreaks.blogspot.com)
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