🎁TA Education 4｜How to Apply MA in Live-trading?

Hello everyone, welcome to the fourth episode of our Technical Analysis series. Today, we’ll be learning MA.

1. What is MA (Moving Averages)

A Moving Average is a calculation used to analyze data points by creating a constantly updated average price over a specific period (e.g., 10 days, 50 hours, 200 weeks).

• Core Purpose: To smooth out short-term price fluctuations and "noise" to reveal the underlying trend direction.

• Primary Function: It acts as a lagging indicator. It doesn't predict future prices; it confirms and defines the existing trend based on past data.

2. Types of MAs

There are several calculation methods, each emphasizing different aspects:

1. Simple Moving Average (SMA): Calculates the average closing price over a selected period, giving equal weight to all data points. It is the smoothest and most lagging, making it effective for identifying long-term trend direction.

2. Exponential Moving Average (EMA): Assigns more weight to recent prices, making it more responsive to current market movements. It reacts faster than the SMA and is commonly used for short- to medium-term trading where earlier signals are preferred.

3. Weighted Moving Average (WMA): Applies linear weighting, where the most recent price has the highest weight. Its responsiveness sits between the SMA and EMA. It functions similarly to the EMA but is less commonly used in standard charting tools.

3. SMA & EMA

Difference Between SMA & EMA: Visual + Practical Implications

On the chart:

• SMA turns only after a trend is well-established. In strong trends, it sits further from the current price.

• EMA turns sooner when a trend begins or ends, “hugging” the price more closely.

Example: In a new sharp uptrend, a 50-day EMA will rise earlier than the 50-day SMA, giving a faster indication that momentum is shifting.

1. Use SMA When…

• You want to filter out noise and see the cleanest long-term trend.

• Identifying major support/resistance (e.g., the widely watched 200-day SMA).

• You are a long-term investor using weekly/monthly charts.

2. Use EMA When…

• You are a short-term or swing trader needing timely signals.

• You want earlier entries/exits in emerging trends.

• Trading fast-moving assets such as crypto.

Important Note

Because the EMA is more sensitive, it produces more crossover signals. This can help you enter earlier but also increases the risk of false signals (whipsaws) in sideways markets. Always confirm MA signals with volume, structure, or key support/resistance.

4. How to apply MA indicators in live-trading

1. The Cost Theory: Average Holding Cost

The foundational logic of the MA is based on the concept of average holding cost. The value of an N-period MArepresents the average price at which all traders who bought or sold over the most recent N-periods are currently holding their positions.

Price vs. MA:

 Price > MA (Profit Zone): Recent buyers are making money. This creates low selling pressure because holders are content, allowing the MA to act as Support.

 Price < MA (Loss Zone): Recent buyers are trapped in losses. If the price rises back to the MA, they often sell to "break even," creating high selling pressure that causes the MA to act as Resistance.

2. Positional Relationship: Signals and Strength

The MA's position relative to the price candles (K-Lines) gauges the market's immediate strength and generates trading signals, such as those formalized in Granville's Eight Rules (four buy, four sell).

• This relationship is a direct application of the cost theory to identify bullish or bearish strength.

3. Trend Health: Slope, Angle, and Inflection

This involves analyzing the physical shape of the MA line to judge the quality and momentum of the trend.

• Slope (Direction):

  • Upward: Average cost is rising = Uptrend.

  • Downward: Average cost is falling = Downtrend.

  • Flat: Costs are stagnant = Consolidation/Range.

• Angle (Momentum):

  • Steep Angle: Indicates aggressive, strong momentum. However, if it becomes too vertical, it is often unsustainable.

  • Gentle Angle: Indicates weak or "tired" momentum, suggesting the trend lacks conviction.

• Inflection Points (The Turn):

  • These are critical warning signs. When an MA shifts from rising to flat, upward momentum is dying. When it turns from flat to falling, a downtrend is likely beginning.

  Note: While the MA lags behind price, an inflection point is a highly reliable confirmation that the macro trend has actually changed.

Event detail

Leave your comments!

You’re welcome to post your technical analysis chart in the comments

Every valid comment will earn 10 Tiger Coins!

If you’d like to share more of your technical analysis insights, click here—you could win an exclusive $5 voucher for the event. Each week, three posts will receive a $5 voucher, and additional posts may earn exclusive Tiger Coin rewards!

Event Duration

Now till 31st Dec.

Reward announcement

Every Wednesday, we send last week’s Tiger Coins and announce the winners of the $5 stock cash vouchers. Congratulations to the Tigers who participated last week!

You’re welcome to join in by commenting just like @koolgal , who shared a very accurate read of a stock’s chart pattern.

Eg: $Advanced Micro Devices(AMD)$ in November.

While its stock price pushed to new all time highs, the underlying momentum, as measured by indicators, told a different story. This pattern serves as warning sign of significant price correction that followed.

AMD hits a 52 week high end October. However the price's higher high was contradicted by the RSI's lower high, forming the classic bearish divergence pattern.

Soon after the divergence became apparent AMD corrected sharply , ultimately dropping 27% from its peak.

You can also post your favorite technical indicators (use simple words), just like @Mkoh did,

Head and Shoulders (H&S) TopLeft shoulder → Head (highest high) → Right shoulder (lower high)

Neckline: support line connecting the lows of the two shoulders

Trigger: Break and close below neckline

Target: Height of head to neckline subtracted from breakdown point

Volume clue: Usually expands on breakdown, weaker on right shoulder

Double Top (“M” shape)Two roughly equal highs with a trough in between

Neckline = support at the trough low

Confirmation: Close below neckline

or @1PC answer the question at the end of the article—last week’s correct answer was Nvidia is in a healthy uptrend!

📘TA Education｜Volume speaks louder than price! On $NVIDIA(NVDA)$ Its observed that the Jan–Mar 2024 shows a healthy uptrend with consistent volume support — buyers in control 📈💚, from Mid-Apr 2025 bullish engulfing candle + volume surge confirmed strong buyer conviction 💥📊Trend remains firm and healthy till now!

We look forward to seeing more of your participation and to learning this week’s technical analysis concepts together.