"Trading with Crossing Moving Averages: A Popular Technical Analysis Strategy."

 

"Trading with Crossing Moving Averages: A Popular Technical Analysis Strategy."

 

Trading with crossing moving averages is a popular technical analysis strategy used by traders to identify potential trends in financial markets. Moving averages are indicators that smooth out price fluctuations and provide a visual representation of the average price over a specific time period. When two moving averages with different time periods cross each other, it can signal a potential change in trend direction.

 

To use this strategy, traders typically use two moving averages with different time periods, such as a 50-day moving average and a 200-day moving average. When the 50-day moving average crosses above the 200-day moving average, it is referred to as a "golden cross," which may indicate a bullish trend. Conversely, when the 50-day moving average crosses below the 200-day moving average, it is called a "death cross," which may suggest a bearish trend.

 

Traders often use other technical indicators in conjunction with moving averages, such as the Relative Strength Index (RSI) or the MovingAverage Convergence Divergence (MACD), to confirm their trading decisions. Additionally, traders should consider other factors such as economic news releases, geopolitical events, and overall market sentiment when making trading decisions.

 

It is important to note that no trading strategy is foolproof, and traders should always use proper risk management techniques and have a solid understanding of market dynamics before making any trades. However, the crossing moving averages strategy has been used successfully by many traders and is worth considering as part of a comprehensive trading plan.

 

In summary, trading with crossing moving averages can be an effective strategy for identifying potential trends in financial markets. By using two moving averages with different time periods and monitoring for crossover points, traders can gain insights into potential bullish or bearish trends. As with any trading strategy, traders should use proper risk management techniques and consider other market factors before making trading decisions.

Photo curtesy of Fidelity Investments 

Trading Stocks Using Dark Pool Volume

Trading Stocks Using Dark Pool Volume

Dark pools are private exchanges where investors can buy and sell securities without disclosing their trading activities to the public. These pools are often used by institutional investors and high-frequency traders to execute large trades without impacting the market. One key metric that can be used to analyze dark pool activity is dark pool volume.

Dark pool volume refers to the total number of shares traded in a dark pool over a specific period of time. By analyzing this metric, traders can gain insight into the trading activities of large investors and potentially identify trading opportunities.

To use dark pool volume in trading, it is important to first identify the stocks with high levels of dark pool activity. This can be done by using tools such as Charles Schwab StreetSmart Edge platform which provides data on dark pool volume for individual stocks. Once a trader has identified a stock with high dark pool volume, they can use this information to inform their trading decisions.

For example, if a stock has a high level of dark pool activity, it may indicate that large institutional investors are buying or selling the stock. If these investors are buying, it may signal that they have a positive outlook on the stock and expect it to increase in value. Conversely, if they are selling, it may indicate that they have a negative outlook on the stock and expect it to decrease in value.

Traders can use this information to inform their own trading decisions. For example, if they see that institutional investors are buying a stock with high dark pool volume, they may decide to buy shares as well in anticipation of a price increase. On the other hand, if they see that these investors are selling, they may decide to sell their shares in anticipation of a price decrease.

In conclusion, dark pool volume can be a valuable tool for traders looking to gain insight into the trading activities of institutional investors. By analyzing this metric, traders can potentially identify trading opportunities and make more informed trading decisions.