GENERATING SIGNALS USING SINGLE MOVING AVERAGE

Moving averages play an important role in generating trading signals in Binary Options .Moving averages aid analysis of a price trend and when used correctly and properly they generate signals which yield high profits to a trader .

DEFINING A MOVING AVERAGE

A moving average is the average value of data over a specified period of time ,so it is a smoothing device of an underlying trend .

SINGLE MOVING AVERAGE  METHOD IN GENARATING SIGNALS

The single moving average method involve a single moving average of a preferred time frame .Time frame is determined by the trades that you need to carry out  -for instance long-term trades ,short –term trades or middle –term trades .As a guide but not law , a 30 day moving average can be used to generate effective signals by traders and a 30 week moving average can be used to generate signals by long term traders

GENERATING SIGNALS FOR SHORT TERM TRADES

A  BUY SIGNAL (CALL) is generated when the price move above the moving average .Price must be above the rising moving average .When price is above the declining moving average ,ignore the BUY (CALL) SIGNAL  .Also  when the price line gets far above the moving average ignore the BUY SIGNAL  and prepare to SELL (PUT).

A SELL SIGNAL (PUT ) is generated when the price move below the declining moving average .When price is far below the declining moving average ,ignore the SELL SIGNAL (PUT) and  prepare to BUY .

For a signal to be generated  a balance should be there between a price line and the moving average ,price line should not be far from the moving average to avoid FALSE SIGNALS .

CONCLUSION ON SINGLE MOVING AVERAGE  AS A SIGNAL DEVICE

The single moving average method is a simple and one of the effective methods in generating signals .It provides profitable signals for traders .By making use of the relationship between price line and the moving average , signals are generated and whipsaws are reduced.

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