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Technical analysis with cell lines Moving Average avarage - MA - SMA - EMA


 ETORO MA is a technical analysis tool used by many Trader and many other Indicator is based on a formula and principles of MA. Artwork on the image moving average lines Moving avarage (MA) This article analyzes the basic instructions for this very popular Indicator.

Install Indicator Moving avarage

Very simple, navigate to selected Indicator & Moving avarage
If technical analysis on 1H chart should use MA with parameters: 50; 100 and 200

Identify trends with ranges MA

Suite MA common function is to determine the trend, basically when ptkt on 1H chart, MA 50 is used to determine the trend, MA ranges upward trend only UP and vice versa.

Find clearance (support - resistance) with MA

When the market is on the upturn, prices are back at this location MA will play a supporting role

DOCUMENTS ON Moving Average (Moving Averages)

A moving average is a way to smooth price fluctuations activities over time. Meaning you take the average value of the closing price in a period of "x".
Like all tools, it is used to assist us to predict future prices. Looking at the average slope of the price you can guess how will change.
As I said, the average street price action flattened. There are many different types of moving averages, and each type has its own flattening levels. Generally, the smoother the moving average reflects the price movements slower. Average undulating road than it reflects the price movements faster.
I will explain the pros and cons of each type later, now let's look at the type of road
different medium and they are marked in some way.

5.1 Simple Moving Average (Simple Moving Average - SMA)
A simple moving average is a type of simple moving averages. Basically, a simple moving average is calculated by aggregating the closing price in the period of "x" and dividing by "x". There are not mistaken? Allow me to explain. If you draw a simple moving average for the period was 5 on a 1 hour chart, you would add the closing price of 5 hours and divide by 5 and so you have a simple moving average.
If you draw simple moving average for the period of 5 on a 10 minute chart, you will add 50 minutes of closing prices and then dividing by 5.
Most graphing tool will perform all the calculations for you. We must know how to calculate a simple moving average because it is important for you to understand the one moving average is calculated. If you understand how each moving average is calculated, you can make your own decision as to which type is better.
Like any other tool, the moving average acts as a delay (delay). Because you are taking the average value of the price, you really just watching forecast future prices and not a glimpse of the future surely.
This is an example of how the average sugar prices flattening operation. On the chart above, you can see 03 different SMA. As you can see, the SMA for a longer period of time is way more than the price delay. Note that the 62 SMA line farther from the current price compared to the 30 and 5 SMA. Because the way you calculate the total price 62 SMA 62 plays of the period and dividing by 62. Your use of the period reflecting higher working slower price movement.
SMA in this graph shows you the general sense of the market over time. Instead of just looking at the current market price, the moving average gives us a broader view and the we can make predictions in future prices.

5.2 Exponential Moving Average (Exponential Moving Average - EMA)
Although SMA is a great tool but has a large room. SMA very disabled. Let me give an example of this:
We draw a line 5 period SMA on the daily chart of the EUR / USD and the closing prices of the last 5 days as follows:
Day 1: 1.2345
Day 2: 1.2350
Day 3: 1.2360
Day 4: 1.2365
Day 5: 1.2370
SMA will be calculated as follows:
(1.2345 + 1.2350 + 1.2360 + 1.2365 + 1.2370) / 5 = 1.2358
Not accurate enough? What if the price is 1.2300 day 2? Results of SMA will lower a little and this gives you the idea the price is going down, while the actual day 2 may just be an event at a time.
With this, I am trying to say that sometimes SMA may be too simple. If there's another way you can remove the spikes so you will not mistake. There is a way, it is called exponential moving average (EMA)
EMA is influenced much more for the latest period. In the example above, the EMA would put more weight on day 3 to day 5, means that the spike on Day 2 would be of lesser value and would not affect many moving average. Street puts more emphasis on the actions of those who now traded.
When trading, traders look to see what is more important is to see what they did last week or last month.

5.3 Which is better: SMA or EMA?

First let's start with an EMA. When you want an average street price reflects faster operation, the EMA with a short period of time is the best way. This can help you capture price trends early and the result is higher profits.
Indeed, you catch an earlier trend, you can trade on that trend longer and collect more profits! The downside for an average road undulating movements that you can be deceived, because averages reflect too fast for the price, and you might think that a new trend is forming, but actually it maybe just a spike.
With an SMA, when you want a flatter moving average and reflecting slower activity rates, an SMA with a longer period of time is the best way. Although it slow reflect price action, it will help you not be wrong. The downside is that it can make you too slow and you may miss a good trading opportunity.
So which one is better? It is hard for you to decide. Many transactions draw many different moving average to have a general overview. They can use SMA with some long time to find cover trends and then use the EMA for the short period of time to determine a good time to trade.
In fact, many trading systems are based on "The moving average crossover". After this section, we will see an example of how to use the medium as part of the trading system.
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In summary:

  • A moving average is simply a way to smooth price action
  • There are several types of moving averages. The two most common types of SMA and EMA
  • SMA is the average form easiest road, but susceptible to (damage) to the spike.
  • EMA heavy bookings for the new price occurs and therefore shows us that people who currently do deals.
  • Knowing who is doing deals more important is to know what they did last week or last month.
  • The SMA flat compared to EMA
  • The moving average with a longer time period than the flat short period
  • The moving average is undulating price reflects activity faster and can grasp the trend early. However, because they reflect the fast, they can easily influenced for pulse and can fool you.
  • The moving average price flat reflecting slower activity, but will help you avoid impulse and no mistake. However, because they reflect so slow you can do transactions slow and missed the best opportunity.
  • The best way to use the average of different drawing styles on a graph so you can see the change in the timeframe long and vary in short periods.