As a trader I look for the best possible odds in every trade, meaning I don't want to gamble with my chances. Even though I know that you can never be certain I still like to think that I know what is a good trade and what isn't.
Not by using my common sense however, that would be too much like gambling. What I am talking about are moving average indicators.
Moving averages are used by almost every trader so I will not take my time to explain what they are. This is about something more advanced called the "crossover".
So if you do not know what moving averages are you should have googled them by now and if you already know then I will tell you about the crossover now. Google simple moving averages (SMA) if you don't know what I am talking about and then come back.
A crossover is when two moving averages cross over eachother. It happens when there is a shift in the market so depending on the crossover you can determine the overall direction. You can see it happen in the image below:
Think of those moving averages as two individual paths, and notice how they are similar but sometimes one is over the other. Of course you can adjust these moving averages to create different paths, and that will determine different market trends.
But notice that as they are moving similarly eventually one crosses the other. That is called a crossover. It happens several times on the above chart and signals a bearish or bullish sign.
This works because one line is fast and one is slow. The faster one is what you want to be looking at, in this case it is the blue line and is a 21 period. The red line is slower and is a 51 period.
To read more about the crossover and learn more go here