Moving Average Whipsaws in Range Market - How Do You Trade Indices in a Range Market?
The Indices moving average is a helpful trade chart indicator to trade with when a trend has formed. However the moving average indicator is prone to fake outs when the price is trading in range market.
The MA is prone to whipsaws during a ranging market because the price is volatile & keeps moving around the average, causing the Indices moving average indicator to give signals indicating upwards trend & then quickly changing to give sell signals.
It is for this reason that the MA indicator should not be used to trade Indices in a range based market.
Range Bound Market & Whipsaws - How Do You Trade Indices in a Range Market
This is why it's best to combine this Index moving average indicator with other indicators when generating signals to trade Indices with.
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