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# Tom Demark (TD) Moving Average

Tom Demark (TD) Moving Average is the instrument for defining logical locations for placing stop loss orders or for exiting a trade, which is how its author Tom Demark describes his TD Moving Average study.

You should use the price level represented by the Moving Average to define a place to exit the long position or to place a stop loss on a trade if the Moving Average of lows goes into effect. You should use the price level represented by the Moving Average to spot a place to exit the short position or to place a stop loss on a trade if the Moving Average of highs goes into effect. The plot of the Moving Average can be used for a period of four bars or until the needed conditions are no longer in effect.

Remember that if the latest peak has reached a value higher than the high of all previous twelve bars, then a 3-period Moving Average of the highs is being measured and plotted until either the condition is no longer true or for a period of four bars (whichever of them is less). Vice versa, once the lowest low in X bars condition is no longer true, the plot continues for a period of four bars.