How to Choose a Bitcoin Moving Average to Trade With
Moving Average 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 cryptocurrency charts, hourly cryptocurrency charts, daily crypto charts or even weekly bitcoin charts.
The bitcoin trader can also choose to average the closing bitcoin trading price, opening bitcoin trading price or median bitcoin trading price.
Moving average btcusd technical 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 trading signals which are used to trade in direction of the bitcoin trend, since the Moving Average indicator 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 trading indicators. However, as a lagging cryptocurrency indicator it gives more accurate cryptocurrency signals and is less prone to whipsaws compared to leading cryptocurrency trading 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 cryptocurrency trading and long term cryptocurrency 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 trading price period in this case can be measured in minute cryptocurrency charts, hourly cryptocurrency charts, daily crypto charts or even weekly cryptocurrency charts. For our example we will use 1 hour crypto chart time frame period.
Short term bitcoin trading moving averages are sensitive to bitcoin trading 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 trading price period that will generate a cryptocurrency signal early but not give too many bitcoin trading whipsaws.
Long term bitcoin trading moving averages help avoid bitcoin trading whipsaws, but are slower in spotting new bitcoin trends and bitcoin trend reversals.
Because long term moving averages calculate the average using more bitcoin trading 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 cryptocurrency 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 trade 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 trading whipsaws).
