If you want to make money in the stock market, you need to master the basic knowledge of the stock market. What is the moving average for many novice stock traders? How to use moving averages in actual combat? I'm not very clear, so let me provide a detailed introduction below.

The moving average, abbreviated as MA, originally meant moving average, which is the sum of the closing prices of a certain period of time divided by that period. For example, daily MA5 refers to the closing price within 5 days divided by 5. How to use moving averages in actual combat? Please take a look below.

The moving average was created by the renowned American investment expert Joseph E Granville was proposed in the mid-20th century. The moving average theory is one of the most commonly used technical indicators today, which helps traders confirm existing trends, predict upcoming trends, and discover trends that are excessively prolonged and about to reverse.

How to use moving averages in actual combat?

1. In operation, the first step is to observe the arrangement of moving averages. Distinguish between long and short positions. Multi head arrangement indicates that multiple parties are controlling the situation, and one can look high at the front line during operation. But it is important to pay attention to the degree of deviation between the stock price and the moving average, and to be aware of short-term downturns, and vice versa. This is one of the key points in how to use the moving average in actual practice.

2. When predicting short-term trends, the 5-day and 10 day lines should be the main focus. In strong markets or stocks, stock prices generally do not fall below the 5-day or 10 day lines. If it falls below, the short-term trend may change. Weak market stock prices or indices generally have 5-day and 10 day pressure lines. Short term moving averages are also mainly referenced by the 3-day and 7-day moving averages. Generally speaking, short-term experts use 3-day and 7-day as short-term reference indicators.

3. Predicting long-term trends, the 120 day moving average is a very important moving average position. The stock price trend is clearly supported or pressured by the 120 day daily line, which has considerable accuracy in studying the medium and long-term trends of the Shanghai and Shenzhen stock markets. The 120 day moving average is not only used for the analysis of the overall market, but also has important significance for the analysis of individual stock trends. Generally, when the moving average falls below the six-month line, the main force has already fled, which is a point to pay attention to when using the moving average in actual combat.

4. To predict the medium-term trend, the main reference moving average indicators are usually the 30 day and 60 day lines. The 30 day moving average has always been an important indicator for measuring mid-term strength and weakness. The 30 day moving average has been effectively broken, and the mid-term trend is optimistic. However, the main market players are prone to using the moving average as a shock buying option. In terms of mid-term buying and selling signals, the 60 day moving average performs better. The 60 day moving average has a significant positive and negative effect on the short-term trend. According to historical data from the Shanghai Stock Exchange, every time the 60 day moving average is broken, there is usually a wave of intermediate market conditions. In addition, daily moving averages such as 21, 34, and 55 are also commonly used for mid-term analysis. Especially the 21 day moving average can generally be regarded as the main lifeline, while the 55 day moving average is the protective line.

5. The annual 250 day moving average is mainly used to predict long-term trends, and many investors use the annual line as the boundary between bull and bear. A comprehensive analysis of the 250 day moving average and fundamentals is necessary to determine whether the long-term trend is truly bullish or bearish, and it is the key to how to use moving averages in practical situations.