Moving Average (MA) - General Description

Discussion in 'Moving Average' started by Profiforex, Nov 18, 2010.

  1. Profiforex

    Profiforex Administrator Staff Member

    Moving Averages are the indicators of technical analysis that are mostly used.

    Moving averages smoothes currency fluctuations by averaging out on some historical period. The advantage of this technical indicator is that it helps to cut off small fluctuations and to see the movement direction clearly.

    The disadvantage of moving averages is: delays of averaged values comparing with currency quotations. It means that the bigger averaged period is, the more important signals they (moving averages) give, but delays become bigger also.

    The moving average is important because it shows the direction of the general movement. Moving averages are like public opinion poll "where the price will go". If they rise, then public expectations are good. If they fall, then expectations are bad.
  2. Profiforex

    Profiforex Administrator Staff Member

    Moving averages are trend indicators. So, they work well on the trend market. Let us find out what is trend? According to the definition, it is the price movement to the definite direction. In other words, trend is the change in price of the current bar, compared with the average price for х-bars.
    So, trend can be defined as the divergence between the average price for x bars and average price for y bars. Let's assume that: x

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