Trading
on crossings prices x MA envelope is a very common method. Envelopes are
bands that are drawn a set percent above and below a MA.
Using envelopes permits
- to follow the trend given by the MA,
- to filter wrong signals given by prices crossing MA during flat market.
Trading
Signals
- crossing prices / high envelope : Buy,
- crossing prices / low envelope : Sell,
- crossing prices / MA : close trade.
Trading
Example (MA 161 env 12 %)
Aggressive
Trading Signals Ÿ crossing prices / high envelope :
close short-selling trade and buy,
Ÿ crossing prices / low envelope: close
buying trade and sell.
Aggresive
Trading Example (MA 161 env 12 %)
The 12 % envelopes of the examples has been choosen to get a "speaking"
graphic. In practice, envelopes are limited to some percents (less than
5 %).