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Day Trading/50 Day Moving Average

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Question
QUESTION: Hello:

I recently heard someone on television say that the Standard & Poors 500 is now trading below its 50 day moving average.  Do you know what time period or range that was used on the chart for the 50 day moving average to be below the 50 day moving average?

I thank you for your reply.

ANSWER: Hi Kenneth,

If the S&P 500 is trading below the 50 day moving average, this would be a DAILY moving average of the last 50 days.

---------- FOLLOW-UP ----------

QUESTION: Hello:

I want to thank you for the quick reply!  In using a chart to show that the Standard & Poors 500 is trading below the 50 day moving average, I need to use a daily chart. Is this correct?

I thank you for your reply and assistance.

Answer
Yes. If you're looking at the 50 day moving average then you would want to look at a daily chart.

Just for clarification, indicators are based on the open - high - low - close - and sometimes volume of a period. So if you are plotting a 50 period simple moving average and looking at a minute chart, then you are seeing an average of closing price over the last 50 periods (or minutes). If you're looking at a daily chart, the "period" used to calculate the average is going to be based on daily closing prices for the moving average.

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Mark Hodge

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Questions related to technical analysis, strategies, risk, trading plans, trading psychology and money management. Experience in trading all markets and time-frames with expertise in futures (e-minis, currencies, commodities) and equity options. Unfortunately I am not allowed to offer any specific trading advice (i.e. should I go long the E-mini S&P today).

Experience

I have been involved in the industry since 1995 working for Morgan Stanley Dean Witter and American Express Financial Advisors before becoming a full time trader. As Head Education Coach with Rockwell Trading I have coached hundreds of students around the world to achieve their trading goals with simple strategies, a sound trading plan and proper money management for the leveraged markets.

Organizations
Currently serving as Rockwell Trading's Head Education Coach www.rockwelltrading.com and moderator for Rockwell's Student Trading Room where we follow opportunities in the minis, interest rates, currency and grain markets daily.

Publications
Technical Analysis of Stocks & Commodities, "Day Trading With Volatility", June 2010 SFO Magazine, "Home on the Range: Lasso Trades Without Time", August 2010 SFO Magazine, "Day Trading Indicators, Part 1", January 2011 SFO Magazine, "Day Trading Indicators, Part 2", February 2011 SFO Magazine, "Technical Strategy", April 2011 SFO Magazine, "Advanced Trading Techniques - Futures Spread Trading", October 2011 Active Trader, "A Simple Day-Trading Strategy", November 2011 Marketplace Books, How to Trade Commodities: Simple Strategies for Gold and Crude That Traders Can Use in Any Market, June 2011

Education/Credentials
Formerly licensed as a financial advisor with Series 6, 7, and 63 licenses. B.A. in Organizational Communications with a Business Minor from California State University, Sacramento.

Past/Present Clients
I have worked with institutional traders, brokers, proprietary trading firms and private traders.
One of the few distinguished World Cup Advisors www.worldcupadvisors.com

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