Trend or system of investment in the stock market

As many of us know, a trend-based system, is based mainly in knowing the tendency and, later, to try to always go in favor of the trend, but using the possible corrections of this.

Through different systems and available in technical analysis indicators, we have already seen a way to know the trend, perhaps the most basic and used to identify the trend than the trend investment schemes based on the intersection of two averages.

The trend most basic systems of investment 

criteria in bag set an example fast about the functioning of these systems of investment trends in stock market, say that they are almost always designed with the following criteria:

* If the slow average is crossed by the average rapid, from bottom to top, have bullish trend

* if it is to the contrary, bone, if the slow average is crossed by fast from top to bottom, we have bearish trend.

Clarifications about the Middle mobile in its incorporation and use in the systems of investment trend.

Perhaps one of the great dilemmas when it comes to incorporate moving averages regardless of the nature or how they compute the result), may be periods used for each of these, there is much information on the Internet, but responding to a question concrete of a reader who has launched a consultation through a comment in another article we did whenever we talk about a slow average and a quick will take into consideration the following criteria:

When we refer to the slow moving average, we will try to explain that we are referring to the moving average based on one larger number of periods.

Being fast moving average on a system, which we use to identify in a more immediate way, sudden in the action of the price changes.

For example, if we have an average of 200 and one of 100, the slow will be 200 and the fast of 100.

Some examples of trading systems based on moving average crosses

Although it seems somewhat obvious and simple, can be seen as choosing a good trend asset that fits this kind of systems based on averages crosses, can be highly effective.

Types of trend systems by volatility and momentum for example, according to tests adapted to markets in particular, can see graphics daily and crosses based on 9 and 18 periods mean are really effective, so, so we invite you to do your own "backtest" or "papertrading" tests to see if this type of configuration is adjusted correctly to your system.

Another type of setting, "very common", may be the investment schemes based on a triple junction of averages based on three different periods as they could be:


Therefore, we could use some crossing of these stockings to meet the longer term trend.

In conclusion, although the mean in a set of investment crosses, can identify changing trends in an asset with relative ease, is always convenient that we filter this type of signals through other technical indicator such as an oscillator or an indicator of momentum or even some indicator of volatility.