WMA 5, 10, 100 Trading
System is based on three moving averages. WMA is the average
value times the different weighted factor to the different dots data.
Buttechnical analytically WMA means where the weight experiencing
weight loss arithmetically. At n-day WMA on recent n weight and the
value of the 2 nd weight is n-1 and so on until it reaches zero
value.
In order to set WMA
indicator you need to set three types of settings WMA5, WMA20 and
WMA100.
HOW TO USE
WMA5, 20 and 100 are one
of the ways and techniques that can help investors to enter a market
whether to SELL or BUY. How WMA helps investors? I will explain in
this chapter to help you use WMA as one of the indicators when you
are trading. However WMA as a disadvantage because it can ignite a
lot of FALSE SIGNAL if you make wrong readings and only based on WMA.
WMA is not suitable to be used alone. It must be combined with other
indicators as I mentioned in earlier chapters. How to use this
indicator? I will explain with the graph below:
OPEN SELL POSITION
-
Make sure you open SELL
position after WMA20 (yellow) crosses with WMA5 (red) as shown on the
graph above.
- If WMA20 (yellow) and
WMA5 (red) cross and nearing WMA100 for crossing, you can HOLD your
SELL position because when WMA20 (yellow) and WMA5 (red) cross at
WMA100 (white) the value or rate of bearish will increase.
- Through WMA techniques
it is quite hard to determine or gain maximum pip profit unless you
refer to other indicators as support for you to close SELL position.
- However if you have
entered SELL position when WMA20 (yellow) cross with WMA5 (red) you
can close your position after the next crossing happens. It means
that when WMA 5 (red) crosses with WMA20 (yellow) you must choose
CLOSED position SELL.
OPEN BUY POSITION
-
Make sure you open BUY
position after WMA5 (red) crosses with WMA20 (yellow) as shown in the
graph above.
- If WMA5 (red) and
WMA20 (yellow) cross and nearing WMA 100 (white) for the next
crossing, you can HOLD your BUY position because when WMA5 (red) and
WMA20 (yellow) cross at WMA100 (white) the value or rate will
increase (bullish) and keep on increasing.
- Through WMA technique
it is quite hard to determine or gain maximum pip profit unless you
refer to other indicators as support for you to close your BUY
position.
- However if you entered
BUY position when WMA5 (red) crosses with WMA20 (yellow) you can
close your position after the next crossing takes place. It means
that when WMA20 (yellow) crosses with WMA5 (red) you need to CLOSE
your BUY position.
It is not enough just by
using WMA 5, WMA 20 and WMA 100 because WMA 5, WMA20 and WMA 100 are
not consistent in trend. There will be a lot of FALSE SIGNAL formed
through this indicator especially when you refer to smaller TIMEFRAME
such as M1, M5, M15 and M30. There must be additional indicators that
function as a FILTER to avoid false signal. Below I listed what are
the advantages and disadvantages and the best way to maximize the
usage of this technique:
• Enter SELL or BUY
position after WMA 5, WMA 20 intersect and you can maintain the
position of SELL or BUY is WMA 5 & WMA 20 intersect at line WMA
100.
• Take profit
after the next intersection takes place. For example, you enter SELL
position after WMA 20 (yellow) intersect with WMA 5 (red) so, you
will need to CLOSE the SELL position after the next
intersection takes place no matter what happen in the profit/loss
that you will face. The same goes if you enter BUY position.
• Never enter SELL or
BUY position in the middle of WMA 5, WMA 20 and WMA 100
because at this stage
there might be a sudden change of trend.
• Never depend only on
WMA 5, WMA 20 and WMA 100 without taking other indicators into
account.
• Make sure you use
these indicators (WMA 5, WMA 20 & WMA 100) together with
indicator RSI or STOCHASTIC.
• Make sure you refer
to all TIMEFRAME in order to avoid any mistake when entering trend.
Begin from bigger TIMEFRAME to smaller TIMEFRAME. For example MN, W1,
D1, H4, H1, M30, M15, M5 & M1.
• The best TIMEFRAME
are W1, D1, H4 and H1.
• Lastly, be confident
in the position that you have entered by relaxing yourself. Follow
and trust the indicators that you are using.
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