InvestorQ : What are moving averages and how are these moving averages useful in taking a view on intraday trading?
Anu Biswas made post

What are moving averages and how are these moving averages useful in taking a view on intraday trading?

Answer
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Aashna Tripathi answered.
1 year ago


When you listen to market analysts and traders explaining you about a stock, they normally talk about 50DMA and 100 DMA. They are basically moving averages which are calculated as a continuous series of prices to smoothen out the ups and downs in the price. Moving averages are useful in identifying when the stock is likely to break out either on the upside or the on the downside. As an intraday trader you make most money when you are able to time your trade around the time these moving averages are breached. The basic thumb rule in moving average analysis is that if the short term averages are exceeding the long term moving averages, it is a bullish signal. For example if the 50DMA is above the 100 DMA and the 100 DMA is above the 200 DMA then it can be interpreted as a bullish signal.