Moving average crossover.

Trading strategy. One of my favorite pattern and I'm going to show you how I trade it.

So, let's take a look at what we got here.

Uh, let me bring up my drawing tools first of all.

There we go. So, show you an example we had here.

Now, first of all, let's identify our moving averages and let's look at the logic of this because there is a logic,.

A market logic as I like to call it.

So, what I've got here is that's my 200 period simple moving average.

That's my 100 period simple moving average.

The one that turns red or green, that's my 50 period simple moving average.

And the black one here is my 15 EMA.

These are the four that I personally use.

There's no super magic to them.

However, I will give you a little tip.

The.

Any moving average can work within a fra.

So, it's literally measuring the average of.

The price over the last x number of bars.

That's all it is. So, uh what does that mean?

Well, it doesn't mean a whole heck of a lot unless.

It has some market logic to it.

Now, when I say market logic, what I mean is the market participants,.

What are they looking at? Because frankly, what makes the markets move is.

People and the elgos that they programmed.

And so there's a lot of self-fulfilling.

Prophecies.

And things like that happen. So the two most commonly used moving average.

Averages.

Are the 200 SMA and the 50 SMA.

And that's the reason I use those two.

That's it. Some people tell me, "Well, Barry, that's just a self-fulfilling prophecy."

And my answer to that is, "Yeah, but why are you using the word just before the phrase?"

What else do you think is going to make these moving averages meaningful?

And I know people who will test out different moving averages.

To see which ones are the best, quote unquote,.

And there's none that are the best.

There, it's very interesting actually, if you do a little back testing on this, which I have done,.

Um you'll find that they all quote unquote work.

And.

Uh but on different scales and that's because they they're means.

Think of them that way. They're an average.

Or a mean. And the markets tend to return to the mean over a period of 50 bars, 100 bars, 200 bars,.

Whatever you want to put on there.

You could put nine, you can put, you want, if you be a Fibonacci purish, you can put 618.

Period moving average, whatever. Now, uh, the reason that I prefer the 50 and the 200 is my primary two is simply.

Because so god darn many people use them and the simple moving averages, not the exponential.

Here's another thing people say, "Oh, why don't you use the 50 exponential moving average?

It's faster." I don't want it faster.

I know, sounds ironic. I never understood that.

Well, I didn't understand for a long, long time.

You want them to be slow.

They actually work better when they're slow.

And maybe I'll do another video on that.

But the basic reason why they work better when they're slow is because of the reversion to the mean mathematical principle.

And I love to trade the reversion to the mean trades.

They work much better with simple moving averages, which are slower.

You want the slower moving average when you're doing reversion to the mean.

Okay. Uh but for today, we're talking about crossover.

So when they all cross over here, what does that literally.

Mean? That means that there's been no major change in price over the last 15 bars because I got my 15 period.

Moving average on there. 50 bars and 100 bars.

So what have we done? We've come back to the mean on three different.

Scales.

Concurrently at the same time. Now think of the probability bell curve, the mean, right?

That's where the the averages are.

But we've got three bell curves combined into one.

Three bell curves on three different fractals, three different scales, if you will, and they're all aligned.

Well, that's not going to stay there very long.

And then what happens is whatever energy, in this case, price action, is going to start moving out to one or edge.

Or the other of that bell curve.

And that's the statistical significance.

Of when you get these moving averages.

All clustering together. Two is fine.

Three is better. Four is even better.

And so now I'm looking for All right.

Think of that as we are in here.

Let me draw this. And maybe it'll make more sense if I do this.

Think of it this way. We've got our bill curve.

Oops. It make more sense if I grab the right drawing tool.

Also, by the way, that usually helps.

So, it's been uh scientifically proven by NASA engineers.

Okay. So, there is our uh bell curve, so to say.

When we get into the mean.

All right. Now we're looking to go away and that's the trade away from the mean.

So everything we do here at top dog trading everything we trade with is mathematically based, statistically based and basically again it's.

Around this probability bell curve. All right.

So I could go into what happens after this but for right now our focus on today is the moving average crossover.

So when you get these moving averages crossing over that's when you have more than one bell curve actually 15.

You know maybe that's the 15 maybe that's the 50 and maybe that's the 100 there and you get such alignment.

Of these three and boom we're looking for some movement now volatility.

We like volatility.

Because that's range in price and I think I speak for all of us when I say we like big range in.

Price so we can make big money so we want to look for things to it's kind of like the principle of.

Consolidation.

If you will low volatility to a high volatility.

It's another way of trading that type of dynamic in price action.

And now we got to have other things.

So what we need is a cycle high cycle indicator.

We need momentum going down. That's a first momentum wave.

We've got to have oh our next higher time frame.

That's why I'm showing this as well.

So as we have this, let's line up our charts.

So yeah. So awesome. If you see where that's the day of the trade right there and we've got um momentum going.

Down on the longer term time frame.

Frankly, I don't care what trend is on the longer time time frame.

A lot of people who trade multiple time frames say trade in the direction of trend of the higher time frame.

I don't give a mouse's left patootuti what the trend is on the higher time frame.

I care what momentum.

Is.

And again can do another video about that.

So we're looking down here at this indicator and that indicator for that.

And that all indicates strength down.

Momentum is the strength of money flow.

Now, another thing that's always helpful to have here, and some of you probably already recognize this, that just happened to be.

When the CPI announcement came out.

So, another thing that helps with technical analysis is when you get a fundamental.

Catalyst.

And it's very interesting though and it's definitely not coincidental.

That markets will go into a consolidation period like this or reversion of the mean period.

Right before.

There's some sort of economic news or it could be if it's an individual stock it could be an earnings report things.

Like that. And like I said, it's not a coincidence because what's actually happening is a lot of people are waiting to.

See what's going to happen and they're anticipating.

Um that report and then they're going to trade on the basis of that report, how they feel about it.

So in this case, it was the CPI.

All right. Oh, uh super important.

Lots of people know about moving averages and so forth.

What a lot of people don't know is about timing.

Their entries. And boy is that a shame because timing your entries is so critical.

So, I want to give you my timing indicator.

This is the indicator I use to time my entries.

On every single trade I take.

Whether it's a moving average crossover, a trend trade, a trend reversal trade,.

Uh triangle trades, bullish band squeezes, whatever.

I use this on every single entry.

And it is super accurate to the penny, pip, or tick.

And I want to give it to you for free.

So, uh just go to indicatorinar.com.

I'll show you how to set it up on your charts.

For full disclosure, it is an indicator already on your charts, but we modify it and customize it and I show you.

How to do that in this recorded webinar and then I show you how to trade it.

So, you get about uh 45 minute um education there.

Again, absolutely free. My gift to you.

Go get it. Oh, and before you leave, make sure that you click the thumbs up and also subscribe.

I'm coming out with many, many more videos.

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Comes out.