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21_Moving Average Exit

Exit Strategy with Moving Averages

Exiting Long Positions:

  • Bearish Transition Signal: Exit or reduce long positions when the price falls below the designated moving average. This shift suggests a switch from bullish to bearish sentiment, prompting traders to safeguard profits or cut losses.

Exiting Short Positions:

  • Bullish Reversal Indicator: Close or lighten short positions when the price climbs above the moving average. This crossover signals a potential trend reversal or weakening bearish momentum, prompting traders to exit short positions.

Moving Average Selection:

  • Period Flexibility: While the 15-period moving average is common, explore different periods to align the exit strategy with your trading style and asset characteristics.

Above and Below the M/A:

  • Bullish Conditions: If the market trends above the moving average, use it as a target for exiting short positions, as markets tend to continue upwards.

  • Bearish Conditions: If the market trends below the moving average, consider it a critical level for exiting long positions, as markets often persist in a downtrend.

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