The Power of Combining 6-Period and 18-Period Smoothed Moving Averages for Short-Term Day Trading

by: Ivan Cavric


Short-term day trading involves buying and selling securities within a single trading day. As a result, traders must be able to quickly identify trends and make informed decisions to maximize profits. In this fast-paced environment, using a moving average can be a helpful tool to assess market trends and make informed decisions.

One of the most popular and effective moving averages used by short-term traders is the 6-period and 18-period smoothed moving average. This combination is considered the best because it strikes a balance between sensitivity and smoothness.

The 6-period moving average is a highly sensitive indicator that can quickly detect short-term price changes. This is especially important for day traders who are looking for quick profits. However, a highly sensitive indicator can also lead to false signals, causing traders to make poor decisions.

The 18-period moving average provides a smooth representation of the trend and eliminates short-term fluctuations. This helps traders avoid false signals and make more informed decisions. Additionally, the 18-period moving average is often used as a key support or resistance level, allowing traders to identify potential entry and exit points more easily.

When combining the 6-period and 18-period moving averages, traders can take advantage of the benefits of both. The 6-period moving average provides quick signals, while the 18-period moving average provides a smooth representation of the trend. As a result, traders can make more informed decisions and avoid false signals.

The signal to buy or sell is generated when there is a crossover between the 6-period and 18-period moving averages. When the 6-period moving average crosses above the 18-period moving average, it signals that the short-term trend is bullish, and traders should consider buying the security. Conversely, when the 6-period moving average crosses below the 18-period moving average, it signals that the short-term trend is bearish, and traders should consider selling the security.

This crossover strategy is widely used by short-term traders because it provides a clear and simple signal for entering and exiting trades. It eliminates the need for complex analysis and allows traders to quickly and easily identify trend changes.

Additionally, the crossover strategy can also be used in conjunction with other technical indicators to confirm the trend. For example, traders may use the crossover in conjunction with the relative strength index (RSI) or the moving average convergence divergence (MACD) indicator to confirm that the trend is strong and likely to continue.

Using the 6-period and 18-period smoothed moving average is the best for short-term day trading because it strikes a balance between sensitivity and smoothness. It allows traders to quickly identify short-term price changes while also providing a smooth representation of the trend, reducing the likelihood of false signals and improving the accuracy of their trades.

Location: Welland, ON, Canada

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