Futures investment skills

(8) . Follow potential technology

① . Moving Average: Definition

The moving average is the most flexible and widely used technical indicator. Because its construction method is simple, and its achievements are easy to be tested quantitatively, it forms the operational basis of most automatic trading systems that follow the trend. As the word "average" means, it is the arithmetic average of the closing price in the last 10 days. The so-called "mobile" essentially means that we always use the price data of the last 10 days in our calculations. Therefore, the averaged array (the closing price of the last 10 days) moves forward day by day with the change of the new trading day. When we calculate the moving average, the most common practice is to use the closing price of the last 10 days. We add the new closing price to the array day by day, and the 11th closing price from the last is removed. Then, divide the new total by 10 to get the average of the new day (10 day average).

② Moving average: a smoothing tool with lagging characteristics. Moving average is actually a tool to track trends. Its purpose is to identify and display the key opportunities when the old trend has ended or reversed and the new trend is emerging. It is responsible for tracking the progress of trends.

The moving average is a smoothing tool. The short-term average is more sensitive to price changes, while the long-term moving average is slower. In some markets, it is more advantageous to use short-term moving averages. On other occasions, the long-term average can play its role.

③ Simple moving average

The so-called simple moving average, or arithmetic average, is most commonly used.

④ Linear weighted moving average

In order to solve the above weight problem, someone proposed the concept of "linear weighted moving average". In this algorithm, if the average value of 10 days is taken as an example, the closing price of the 10th day should be multiplied by 10, the 9th day by 9, the 8th day by 8, and so on. In this way, the later the closing price, the greater the weight. In the next step of calculation, we divide the sum by the sum of the above multipliers (in this example, it is 55:10 ＋ 9 ＋ 8 ＋ 1=55). In any case, the linear weighted average method still does not solve the first question, that is, it only includes prices within the moving range of the average value.

⑤ Combination of moving averages

Most analysts use a combination of two or three moving averages. The average values are calculated from the closing price. The most commonly used moving average days are 5 days, 10 days, 20 days, and 40 days, or some variation of these numbers (such as 4 days, 9 days, and 18 days). A futures variety is bound to have an optimal set of moving averages. Selecting the optimal combination of moving averages requires complex computing by computers, which is difficult for ordinary investors at present. However, investors can compare and estimate the moving average portfolio of a certain futures variety, and choose the optimal moving average portfolio that suits them.

⑥ The buying and selling principle of moving average

The methods of using moving average to buy and sell generally include:

First, buy when the closing price is higher than the average; Sell when the closing price is below the average;

Second, buy when the market price is from bottom to top and exceeds the average; Sell when the market price falls below the average from top to bottom;

Third, use two moving averages with different length of time. Buy when the short-term moving average rises above the long-term moving average from bottom to top; If the short-term moving average falls from top to bottom, sell when it falls below the long-term moving average;

Fourth, buy when the closing price is higher than the short-term and long-term moving averages, and close the position immediately when the price is lower than one of the averages; Sell when the closing price is lower than the short-term and long-term moving averages, and close the position immediately when the price is higher than one of the averages.

The common feature of using moving average trading is that it focuses on the basic trend, ignoring the temporary fluctuations of prices, and its disadvantage is that it is not adaptable.