EXPMA

If you want to obtain stable returns in the stock market, you need to master some technical analysis methods and indicators. Technical analysis is an analysis method that determines the trend and future direction of the stock by studying the price trend and trading volume of the stock. Among them, a commonly used technical indicator is EXPMA, which is the exponential average indicator or exponential smoothing moving average.

EXPMA is a trend indicator that can make up for the shortcomings of the ordinary moving average (MA) and solve the lag of the average. EXPMA calculates an average that better reflects price changes by giving greater weight to recent prices. EXPMA can follow price fluctuations more quickly and therefore more accurately display price trends and turning points.

So, how to use EXPMA to select stocks and trade? Below we will introduce some practical tips and methods.

How to use EXPMA to select stocks?

If you want to use EXPMA to screen out potential stocks, you can refer to the following steps:

Choose an appropriate time period. Different time periods represent different investment styles and goals. Generally speaking, short-term investors can choose daily or weekly lines, and medium and long-term investors can choose monthly or quarterly lines.

Choose an appropriate parameter. The parameter refers to the number of periods used in calculating EXPMA. The smaller the parameter, the more sensitive EXPMA is and the faster the response is; the larger the parameter is, the smoother EXPMA is and the slower the response is. Generally speaking, commonly used parameters are 5, 10, 20, 30, 60, etc.

Observe the direction and pattern of EXPMA. The direction of EXPMA can show the general trend of the stock. If EXPMA is upward, the stock is in an upward trend; if EXPMA is downward, the stock is in a downward trend; if EXPMA is flat, the stock is trading sideways. In addition, the pattern of EXPMA can also show the strength of a stock. If EXPMA shows a monotonous rise or fall, it means that the stock has strong momentum; if EXPMA shows a wave-like or zigzag shape, it means that the stock has large fluctuations or shocks.

Observe the relationship between price and EXPMA. The relationship between price and EXPMA can show buying and selling signals for a stock. If the price crosses EXPMA above, it means that the buyer's power has increased, which is a buy signal; if the price falls below EXPMA, it means that the seller's power has strengthened, which is a sell signal; if the price hovers near EXPMA, it means that the power of both parties is equal, which is a wait-and-see signal. .

How to trade with EXPMA?

If you want to use EXPMA to guide your trading decisions, you can refer to the following tips:

Make use of EXPMA’s golden cross and dead cross. When the short-term EXPMA crosses above the long-term EXPMA, it is called a golden cross, which is a buy signal; when the short-term EXPMA crosses below the long-term EXPMA, it is called a dead cross, which is a sell signal. For example, when the 5-day EXPMA crosses above the 20-day EXPMA, you can consider buying; when the 5-day EXPMA crosses below the 20-day EXPMA, you can consider selling.

Utilize EXPMA for support and pressure. When the price is in an upward trend, EXPMA can serve as a support level, and the price will tend to rebound near EXPMA when it pulls back; when the price is in a downward trend, EXPMA can serve as a pressure level, and the price will tend to fall back near EXPMA when it rebounds. For example, when the price is running above the 20-day EXPMA, you can buy when the price pulls back to the 20-day EXPMA; when the price is running below the 20-day EXPMA, you can sell when the price rebounds to near the 20-day EXPMA.

Take advantage of EXPMA turns and breakouts. When EXPMA turns or breaks through, it indicates that the trend of the stock may change, which is a signal to pay attention to. For example, when EXPMA turns from downward to upward, it means that the stock may turn from falling to rising; when EXPMA turns from upward to downward, it means that the stock may turn from rising to falling; when EXPMA breaks through the previous high or low , indicating that the stock may form a new trend.

Summary

EXPMA is a commonly used technical indicator that can help us judge stock trends and buy and sell signals. By mastering the above stock selection and trading skills, we can better use EXPMA to improve our investment efficiency and returns. Of course, we must also pay attention to combining other indicators and factors for comprehensive analysis to avoid blindly following a single indicator that may lead to wrong judgments.

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