I was reading moving average chapter from varsity and I had a doubt. Please refer to the chart below of ambuja cement which the author gave as a reference.
The author says, "Starting from left, the first opportunity to buy originated at 165, highlighted on the charts as [email protected] Notice, at point B1, the stock price moved to a point higher than its 50 day EMA. Hence as per the trading system rule, we initiate a fresh long position.
Going by the trading system, we stay invested until we get an exit signal, which we eventually got at 187, marked as [email protected] This trade generated a profit of Rs.22 per share."
My doubt is, It is ok to see an old chart and say here the current price is above 50 days EMA so we should buy and vice versa. But when I am actually trading, I won’t get this complete chart. I would rather be sitting at day B1 or S1 or B2 or S2 or so on, and I have to make a call whether to buy/sell or not. I won’t have chart of its succeeding days(like author shown as an example).
When I am trading, say I am at day B1, the moving average might move sideways(flat after that). How is that even useful then?