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Trading the Stock Market Utilizing Moving Averages

One of the basic tools I use is the 200 day moving average. The 200 day moving average indicator has been around for a great deal of time. Dick Fabian called it the 39 week rule. When you are above it, you can be in the stock market and when below you want to be either short or out of the market.

However looking at the moving average currently we are zig zagging and the trend is not clear. At this point I personally have several small short positions. Not convinced the world is going to crash due to Greece, Spain or Italy however I am letting the market tell me what it wants to do. My opinions mean absolutely nothing. I would look for either a breakout to the upside in order to go long or a break down to go short.

Look at this Moving Average Chart

Look for my upcoming book- The Bible of Trend following – How professional traders compound wealth and manage the risks.

Past performance is not necessarily indicative of future performance. The risk of loss in trading futures contracts, commodity options or forex can be substantial, and therefore investors should understand the risks involved in taking leveraged positions and must assume responsibility for the risks associated with such investments and for their results. You should carefully consider whether such trading is suitable for you in light of your circumstances and financial resources.

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