Hey, guys, welcome back.
So in the previous lecture, we have seen how to find and train, how to recognize it is a uptrend or
a downtrend using higher dose and higher bottoms.
Right.
And lower tops and lower bottoms.
So maybe I want to see the second way of finding if the stock is in an uptrend or the stock is down.
Now, this is the most simplest way to find the trend in the market.
OK, so we are going to use an indicator and the name of that indicator is known as the moving average.
OK, so what is a moving average?
First, let's look at what is it average now?
And almost all of you know about what is the average we have learned in this fourth grade.
But let's have a quick recap.
OK, so how do we find out?
So let's say that we have five prizes for five.
OK, so the final of the average of these we what we do is we add all this right.
And we divide it by number of.
Lines that we have a number of data points that we have, so we have five numbers, so we will out of
the phone numbers and it will divided by five.
So this is known as average, right?
Average know know what is mean by moving average.
Now, what is the mean moving average?
It is now every day we get a new value, right?
Every day of the dead.
End of the day, we get a new closing price.
So if we have to calculate the moving average from today to the last 20 days, what will be happening
is tomorrow new prices will be added, double moving average.
Right.
So every day, every next day, what will happen is that it would be a new price, but now this becomes
six.
But we want to find out only five.
So we add one and B minus the first one.
We add another one.
We substate this one.
We add another one.
We sub-standard this one.
Right.
That's why it is known as moving average, right, because it moves so notable that you have to find
all the moving average of them.
So what it will do is this is first, let's take the 10 values.
This is one, two, three, four, five, six, seven, eight, nine, 10.
Right.
So if we have to find a moving average of this, we will be calculating directly.
So every day that we get a new price.
So it will be, added Bobbio, and we will minus one.
The new price will be ideal.
The equilibrium minus one new price would be added.
It would be minus one.
That's how this works.
That's how the moving average works.
Right.
And that's the basic analogy.
Or however the moving average works.
OK, now.
Now you might have your people using a lot different types of moving average.
Right.
Or they can use value somewhere around five, 20 or 15.
People use a lot, many types of moving average using different filters.
But let's make a little golden rule.
Now, remember when as a golden rule, you have to learn this, you have to know that this is the most
important part of whole of my teaching, because this is what I have learned from my experience and
which is very valuable.
And you will not find out this anywhere as.
Right.
So what moving average we should be using now 20 moving average.
Now listen carefully.
Okay, 20 moving average is the most powerful technical tool or indicator available in the whole gamut
of technical analysis.
Yes, when the moving average is the most powerful tool that you can find on this, or this is a boon
for technical traders looking for any moving average.
Remember, everyone will know we are always going to use 20 moving average.
And listen, until I tell you for the particular strategy where you will be using 20 moving average
everywhere.
Right.
OK.
So whenever I say moving average, it means that it is be moving average and you buy this.
So now we have seen pretty moving average.
Now let's see how we can find a trend using gurantee moving average.
OK, so let's go into charts.
OK, so if you don't have your brokerage account, you can see how free you can get a free website where
you can see charts.
It is known the name of the website in trading will dot com trading dot com and you can go in stocks
and this would pop up.
OK, now this is a fantastic job and you have been learning about candlesticks in the upcoming lectures.
So this is the basic type of game.
How do you do convert this line?
Now, when you start to open the website, open the charts, you will be looking at this kind of a job
market.
So how do we convert the line into.
So this can be simple.
Just all you can see this line.
Just click on that and you'll get a bunch of options.
But we are only going to use this guidance, simple guidance.
Just click on it and change from a line chart to candlestick tax.
OK, now the second is how we should add that indicator.
Now you can see this written as indicators, indicators and strategies, but this strategy don't work.
But yeah, so over in the search, just simply type by moving.
Average.
OK, so we are going to use simple moving average and not exponential rate due to Harless mood.
OK, we are only going to use simple moving out and you'll find out in the second why it is the most
important, why we use more simple moving out.
Just on the simple moving average.
OK, now you can see there is a line falling which is crisscrossing the canvas again and again.
That is a moving average again.
But now this is by default, nine moving average, maybe 120 moving average.
Now, on the left hand side, you can see this Emmi nine close zero and bunch of options.
So you click on the gear, which is the settings, just click on it.
OK, and you get this.
OK, so going in, but we are not going to change anything.
Oh, or you can change the color.
OK, I going to go to the doctor one and I will also increase the.
OK, so born in August and instead of Lent, the Lent is nine in after, you will get this by default
value.
We yaguchi this by default value from nine to twenty and just simply click on.
OK, we have not changed anything else.
OK, now let's now this is a weekly chart, ok.
Now there is only one rule.
If the price is about the moving average, it is OK.
If the prices are about moving average then this is up right now.
Well, you can see that the this is the trend moving average and the prices are trading about the moving
average.
So this is a trend.
Let's look at a daily chart.
Okay.
So you can see that the prices moving about, moving average right now, granade brogues on that.
Now, let's see what happens tomorrow.
So this is known as a trend.
This is a prime game, but the price is moving about the 20 moving average, this is upbring again nearer
to the disaster and that adopted this moderate risk.
We go down to what you can see now, if you can if you can see that over the moving average is very
close to the point where the fight is very close to the moving average.
So this is more of a sideways market, but you wouldn't be burning up the hill today.
Now, there are products of market trends in the market and no sideways market trend.
It means it goes up fast and sideways, means it just barely moves up or down.
It just goes flat or it remains flat.
OK, so this is how you can find a trend in the market now just as the Internet.
Let's go and go over the chart and see what's happening now.
Just click on our the chart.
And just like, OK, now can you see this?
This is a downtrend.
This is a where the price is trading about a moving average.
So this is a trend.
Now you can see how big it uptrend was right now.
Right.
So there is again, after our next look at some of the downtrends, OK?
So the moving out is very, very much more powerful than just simply finding out trends in the market.
OK, now let's start with the weekly chart and look at it now.
Can you see this?
The moving, the prices trading below moving average, the prices trading below moving average.
So this is a downtrend, right?
If we go in the daily chart, let's look at what is the trend in the market.
Oh, we can see that when the price was about moving average, it went up like crazy.
Right?
But once the big now over year, it was a sideways market, sideways market.
We will be learning another indicator for how to find it.
The stock is trending or the stock is not trending.
Right.
So moving average, we are going to use only to find a trend.
If the trend is strong, uptrend or trend is downward trend.
OK, so if the price is trading below Gwenny moving average, then this is a downgrade, right?
So based on this 20 moving average, we can decide whether we should be short on a stock or whether
we should do a long trading in the stock.
Right.
So it is very simple if you see a 15 year chart.
So this is very illiquid.
We got do interest in this.
Let's go to Reliance Industries.
So, again, you see this, this is a 15 year chart.
So for the past few days, the stock was not moving.
It was badly going up, sometimes up and sometimes down.
Right.
But today there was a very loud move.
And actually we came to know about this loud boom before it happened.
So the price move about moving average, this means that there is a clear indication that it is in upgrade.
Right.
So that's how we can avoid trading or trading in those markets, which does not have the potential to
move up or down.
Right.
So if if we are day traders, we have to wait for those stocks, although we are only trading those
stocks, which has a potential to move up quickly.
Right.
We cannot waste our time as a day traders.
If the stock is not moving quickly, then it is not that a good stock to be trading in.
Right.
So I hope you got how you can use the moving average to find out the trend in the market.
So that is basically it.
The prices trading about 20 moving average.
It is uptrend, OK, if the price is trading at the price of trading above the doctrine and the price
is trading below 20, moving average of it is a down.
Right.
So I hope you got value from this lecture.
So in the next lecture, we are going to see how you can use trend lines to find out a trend in the
market.