This is the trading playbook where the
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Hello everyone and happy Saturday.
Welcome to the trading playbook. My name
is Lawton with your verified investing
your host and today I have a great
episode for you. But before I go any
further, please consider liking this
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And I just want to say thank you so much
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um
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Um come check us out and see what we're
doing in that service. With that being
said, guys,
uh we have a very exciting episode to
talk about today.
And here's the play.
So we're going to be talking about
moving averages and in particular
SMAs, the simple moving average, and
teaching you guys how to use it to
potentially take trades via the golden
cross and the death cross. Now those
sound like really kind of insane and
intense different names, but I promise
it'll make sense um
very soon. So, let's go ahead and share
my charts and we'll hop into it. So, the
first thing we want to do is put on a
simple moving average um
indicator, right? And we have to Before
we do that, we have to define what is a
simple moving average. Well, a simple
moving average, and I'll I'll go ahead
and turn on these simple moving
averages. You can literally go in
um
You can literally go into TradingView
and just click on any simple moving
average or SMA, right, for short.
Simple moving average.
But, basically, what a simple moving
average is is just a moving average
calculated by taking each price, right?
So, each price up or down tick will um
modify the average, and you can have it
in different time frames, right? Or
different amount of
I guess intervals. So, you can have an
SMA 20, 50. You can have any number,
right? But, just know that that means
that the average will change,
right? That much more. Right? So, if you
have a wider spectrum, right? Let's say
you have an SMA 200, it's going like one
specific day or two specific days of
extreme outliers up or down is going to
affect it a lot more than it would say
the SMA 20 or SMA 50.
Right? So, that's all you need to know
about moving averages, right? Um
And right now, I have two turned on
right now, a blue one and a red one that
I've done for you.
And that is the SMA 50
and the SMA 200, which means whatever
time frame I'm looking at
um this is the absolute moving average
based on the last 50 candles, whether
it's weekly, daily, whatever. Um
and 200 based on, you know, the weekly,
daily, whatever time frame, minute, you
know, uh time frame, whatever you want
to use. And so, I'm going to explain two
specific concepts for you
um that you can use in trading and we'll
we'll kind of back test that as well,
right? Just so you can kind of see
what's going on. So, what is a death
cross? Well,
a death cross
when the
50
SMA
crosses crosses, literally crosses below
200.
Below the
200. Okay.
And then a golden cross
cross
below the
Or we can just do the 50, I guess.
The 50 SMA
crosses above the
SMA.
We're also going to add
that the death cross, just like it
sounds like, is bearish.
And the golden cross is bullish. So, I
hope this kind of makes sense, right?
Back here, remember,
in this case, blue is 50 and red
is going to be 200. Okay?
So, what this means is the shorter term
SMA crosses below the 200 SMA the the
the 200 SMA, it's bearish.
When the short term SMA crosses above
the longer term SMA, it's bullish. And
let's see if it worked out. And we'll
pull it over here looking for moments in
which you have a cross, right?
Again, the red is 200 and the blue is is
50, right? So, we saw here what
happened.
Well, we saw that the shorter term blue
actually crossed below, right? Crossed
below
the uh
the 200 SMA, right? So, this is
Let me see if I can draw a little arrow
here.
This is a death cross right here.
Because the two the 50, excuse me, the
shorter term crosses below the longer
term. And we can see here on the S&P
that it worked out, fell about 22%.
And if you were only using this as an
indicator, right? Saying that, "Hey,
you know, this is a place to short." You
could have made 22%. And let's see about
the other way, right?
Well, this over here, let me draw an
arrow to it here so you guys can see.
Oops, excuse me.
This over here is a golden cross where
the shorter term blue line goes above
the red line. And we can see a great
huge push up about 50% higher.
Now, let's look over here.
You see the cross over here.
Comes down. And depending on where you
enter, right? Could have made about 6%.
And then when it crosses back up,
you have a nice move up. Do you kind of
seeing what I'm saying, right?
This is a death cross. This is a golden
cross.
This is a death cross and then a golden
cross. Let's take a look at something
else.
I have a feeling that if we turn it on
here,
the Qs are going to have a similar chart
just cuz the S&P and the Qs kind of move
in tandem,
um generally. So we can see here we had
a minor death cross here.
And depending on where you entered, you
would have been able to make
approximately
My keys aren't working. Apologize. About
7%. But when it crossed back over, you
saw a nice push up
all the way up 26% and even now. Now it
got very close over here, but we're
going to keep this going, right? And
make sure that you guys fully understand
how to use this. All right. Let's go to
Tesla.
I'm going to delete my drawings and see
can you find
the crosses?
Right? What is this?
Right? I want you to take a second, see
if you can tell me is this a death cross
or is this a golden cross? Is this
bullish generally or is it bearish?
Right?
And in this case, very interestingly
enough,
this is actually bearish. This is a
death cross because the the 50 SMA, the
shorter time frame, crossed below the
longer time frame.
Right?
And taking a look at this, you could
say, "Well, what that This is not
working. This is a bad short." Look, it
pushed up 32%. Yes,
but then what happened? Then it
absolutely tanked. So death crosses,
golden crosses can work sometimes, but
they aren't just like every single other
piece of technical analysis, you need to
take it with a grain of salt.
And make sure to
um use it in conjunction with other
factors.
All right, guys.
Here's the final read.
When you're using any of these factors,
golden crosses, death crosses, guys,
make sure to first off understand that
it's a one factor trade, right? If
you're just simply using that. Now,
generally does it work out? Well, yeah,
and you can go ahead and back test that
by yourself.
But, guys,
but the more factors you have, the
higher percentage chance you have of it
succeeding. The way I like to think
about it is thinking like, okay, each
factor, say, gives you
um
let's say the first factor gives you a
60%
chance
of it moving in your favor. And as you
add more factors, obviously it's not
going to be another 60%, it'll be adding
more percentage of a trade possibly
going in your favor. However, right? Um
there's always a risk of things going
against you, so make sure to have a plan
regardless of what happens. Let's say
the first factor you have 60% chance of
working out, you have two factors that's
80%, three factors 85%.
Um but there's still that 15% chance
that maybe it doesn't quite work out the
way that, you know, it's it's favored
to, right? Because we're we're dealing
in probabilities.
That's just something to keep in mind,
guys.
Um
again, guys, please make sure to like
this video, comment below what you want
me to cover next. Was this helpful? Was
this not helpful? Uh and tomorrow I will
give you three actionable trade setups
based on these death/golden
crosses. So, make sure to check out for
that one. With that being said, that's
all I have for you today. Have a
wonderful rest of your day, guys, and
I'll see you bright and early tomorrow.
Have a good one. Take it easy. Bye-bye.
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