How to Choose a Bitcoin Moving Average to Trade With
MA Leading Cryptocurrency Indicators
A trader can choose a moving average based on the crypto chart time frame that he is trading; the trader might choose to use this Moving Average indicator on the minute charts, hourly charts, daily crypto charts or even weekly bitcoin charts.
The bitcoin trader can also choose to average the closing bitcoin price, opening bitcoin price or median bitcoin price.
Moving average btcusd indicator is a oftenly used indicator to measure strength of bitcoin trends. Data is precise & its output as a moving line can be customized to a bitcoin trader's preferences.
Using the bitcoin trading moving average is one of the basic ways to generate crypto buy and sell signals which are used to trade in direction of bitcoin trend, since the Moving Average is a lagging indicator & a bitcoin trend following technical indicator - this means that it will tend to give late crypto entry signals as opposed to leading cryptocurrency indicators. However, as a lagging cryptocurrency indicator it gives more accurate signals and is less prone to whipsaws compared to leading cryptocurrency indicators.
Bitcoin Traders select the moving average period to use depending on the type of bitcoin trading they do: short term bitcoin trading, medium term trading and long term trading.
- Short-term bitcoin trading: 10 - 50 Moving Average Period
- Medium-term bitcoin trading: 50 - 100 Moving Average Period
- Long-term bitcoin trading: 100 - 200 Moving Average Period
The bitcoin price period in this case can be measured in minute charts, hourly charts, daily crypto charts or even weekly charts. For our example we will use 1 hour crypto timeframe period.
Short term bitcoin trading moving averages are sensitive to bitcoin price action and can spot bitcoin trends signals faster than the long term moving averages. Shorter term bitcoin trading moving averages are also more prone to whipsaws compared to long term moving averages and a trader should choose a bitcoin price period that will generate a signal early but not give too many bitcoin whipsaws.
Long term bitcoin trading moving averages help avoid bitcoin whipsaws, but are slower in spotting new bitcoin trends and bitcoin trend reversals.
Because long-term moving averages calculate average using more bitcoin price data, it does not reverse as fast as a short term bitcoin trading moving average and it is slow to catch the changes in the trend. However, the longer term bitcoin trading moving average is better when the bitcoin trend stays in force for a longer time but may also give late bitcoin signals.
The work of a trader is to find a moving average period which will spot bitcoin trends as early as possible while at the same time avoiding fake-out signals (bitcoin whipsaws).
