Now it’s your turn. At this point of the course we have set a task to reinforce what we’ve shown you. This task will require you to use a charting package to carry out the exercise. You can set up a free practice trading account with access to charts here.
Goal: To understand a simple moving average crossover strategy.
Exercise: Let us try a very basic strategy but we strongly recommend you do NOT trade this with real money. On a chart of any security add a 50 and 20 period SMA. Using what we showed you in the Using Moving Averages video, find where the faster moving average cross above or below the slower one. When would this have resulted in a profitable trade, when would the trader have been whip-sawed?
Difficulty: 3/3
Time to complete: 40 minutes
Solution….don’t press play until you’ve done your bit: