Most of the time I’m happy to go with something I think is going to perform well, but I’m also aware that other factors need to be accounted for. One very important factor is margin. Margin is the amount of money that is being bet against the position at a given point in time. You have seen people who will bet on a $1 reversal on the $1 move because they have 10 cents of margin. They make their money back in money they’ve already earned on that $1 move, so they are already making money off of the trade, but they have lost more than $1.10 on the position. Margin also doesn’t account for spreads, which are the spread of the currency you are investing in: a $1 spread on the Euro would mean you lose $1 or $2 if someone takes a different currency out of the market at that specific moment (though the exact opposite could be true). On the other hand, a $5 spread on a dollar would mean you lose $5.10. Margin is a big component of all of the trading I do. The reason I prefer to go with a moving average on the SIXTEEN is that it will be a better bet of the trade than just looking at a single moving average based on a specific moment in time.
How do moving averages work? When you look at a chart of an index or a market that is heavily trading, in the chart you’ll see a moving average of the positions in the index or market over a given period of time. The number between 0 and 100 denotes how much money is being bet against the position with that number. So if the moving average moves back down to 0 or goes back up to 100, that means the amount of money has shifted a certain amount towards the position. The reason I recommend you take a look at the chart of a SIXTEEN over a particular trading period is because it will be different from different trading periods for a given index. But I will give you an explanation of why the SIXTEEN is a good buy when we talk about the buying techniques I use to profit from the moving average. Now, it’s no secret that I have my favorites: the Fibonacci Retracement Levels. The SIXTEEN is considered a FUBAR, or an extreme buy. FUBAR is a technical chart that I use for when I want to know as much as possible about the price movement to the trend of the particular time. For example, if