250Days Moving Average

Why most of the Technical Analysis Course uses 250-day Moving Average?

Moving Average constitutes a very popular method of predicting the price trend or movement, it smoothen out erratic movements in trend charts. With this method, it becomes easy to see a clear picture about the behavior in the share movement. This is a very simple and easy method of analysis and prediction.  Hence, many technical analysis courses love using moving average setting up their trading strategy because of it simplicity yet powerful in establishing the

250 day moving average trend line

250 day moving average trend line

trend.

We notice that there are many technical analysis courses applying 250-day MA.  Perhaps investor could also find out this particular moving average has been widely used in most of the chart which representing long term trend.  Unfortunately not many technical analysis books or course really reveal why 250-day MA is being used as a long term trend.

In certain technical analysis course, we even come across the lecturer who tried to convince us to accept 250-day MA as is; the reason given is high correlation with share fluctuation.  Unfortunately the lecturer fails to give us the reason.

Why 250-day MA?

For investor who always delves in share trading could find that most of the share market trade within 230-250 day per year.  While investor performs stock analysis by using moving average technique for yearly trend, the best option to achieve this is set the moving average to 250 days, the round up figure to every year trading day.

Now we know the reason why 250 day time-cycle being set.

What 250-day MA means to investor?

250-day MA is 1 year trend.  By judging 250-day MA, investor could find out the average share price for the pass 1 year.  Compare existing share price with the 250-day MA price, investor could examine the margin to participate in this share.

250-day MA also stands for yearly trend.  Many technical analysis courses take this as a long term trend and start making their long term trading strategy base on this moving average trend line.

How to Trade under 250-day MA?

Before we go into details about setting up trading strategy under 250-day MA, please ask yourself if you are willing to hold a particular share for 250-day or more before start making profit?  Do you really think that 250-day is really too long for your investment behavior?

250-days consider a long term trading method.  Investors who setup their trading strategy base on 250-day MA should be ready for long term investment.  Any trading strategy setup by judging 250-day MA may also encounter slow response in share price, another words a trading signal only appears after particular share has moved up for awhile.

In practical, 250-day MA is not a common moving average trend line use for setting up a trading strategy.

What special about 250-day MA?

We know the reason why 250-day MA is being defined.  We know how to interpreting 250-day MA means to us.  We know the deficiency about 250-day MA.  What next?  Which is the best time-cycle MA is the best moving average that representing long term trend?

We have done many comprehensive researches and find out the clue, 120-day MA for long term trend.

120-day MA?

120 day moving average trend line

120 day moving average trend line

New to 120-day MA?  In our study, instead of defining 250-day MA as a long term trend, we use 120-day MA as replacement.  120-day MA is almost 2 times faster in response compare to 250-day MA.  A few reasons we use 120-day MA as long term trend:

1)      120-day MA is work harmonize with 60-day and 20-day MA;

2)      120-day MA represent half-year trend;

3)      Most of the investor hold any particular share less than 120-day;

4)      120-MA just the optimize time-cycle period representing long term trend;

 

Investor is advise to check out our technical moving average course and learn from here.