Moving Average Indicators
Moving Average is one of the most commonly used
Perhaps the most common one is the Simple Moving Average or SMA for short. It is being normally derived by adding closing prices of a market and then dividing it by the number of time periods involved. The process is repeated for each time period and resulting curves are usually much smoother then the given raw price charts.
For practical purposes, though, it might be too smooth at the end, therefore missing much of the most immediate price action dynamics. To remedy that comes the Exponential Moving Average or EMA for short ( also occassionaly called the Exponentialy Weighted Moving Average). Here the most recent price figures are being multiplied or 'weighted' resulting in a curve following the price action more closely.
Now, when these Average price indicators come handy is when those are plotted on the same chart with the lines corrsponding to different periods of price averaging. Often the intersections of these lines correspond to rapid price trend reversals and therefore hinting of possibly lucrative market entry/exit points.
I personally wouldn not try using this indicator offline - if I was to plot it out by hand, there is just too much math involved. But with today's widespread of online trading
Perhaps the most common one is the Simple Moving Average or SMA for short. It is being normally derived by adding closing prices of a market and then dividing it by the number of time periods involved. The process is repeated for each time period and resulting curves are usually much smoother then the given raw price charts.
For practical purposes, though, it might be too smooth at the end, therefore missing much of the most immediate price action dynamics. To remedy that comes the Exponential Moving Average or EMA for short ( also occassionaly called the Exponentialy Weighted Moving Average). Here the most recent price figures are being multiplied or 'weighted' resulting in a curve following the price action more closely.
Now, when these Average price indicators come handy is when those are plotted on the same chart with the lines corrsponding to different periods of price averaging. Often the intersections of these lines correspond to rapid price trend reversals and therefore hinting of possibly lucrative market entry/exit points.
I personally wouldn not try using this indicator offline - if I was to plot it out by hand, there is just too much math involved. But with today's widespread of online trading
posted by Ramzes at 11:46 PM
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