Explanation of the Moving Average and how to benefit from the moving average indicator in trading

Explanation of Moving Average ; There are many ways and means that the trader can use to identify and evaluate market movements and trends in the long run, and there are also many tools that the trader can use to determine entry and exit points, and perhaps the most important of these means is the moving average, which is one of the tools Technical Analysis.

Uses of the moving average

The moving average is one of the oldest and most widespread technical analysis tools, and it accurately reflects the prevailing trend of the markets in a specific period of time. During the provision of the available information, and although the moving averages monitor a lagging condition of the market, which is why they are called lagging indicators, they are of great importance as they were essential in developing new trading strategies by creating them.

What is meant by the moving average is the average prices of assets during a certain period of time, and in order to be able to calculate the moving average for a period of ten days, we must put 10 specific prices for a specific asset and calculate their average, and this is called the simple average.

Types of moving averages

There are many types of moving averages, in the previous example this is called the simple average, the accelerating moving average and the geometrical moving average.

accelerating moving averages

This average is calculated through three stages: the first stage is the calculation of the simple moving average, the second stage is the calculation of the weighted multiplier, which is the variable factor that moves prices, and the third and final stage is the calculation of the accelerating moving average.

Accelerated moving averages are used to reduce the delay period by weighting recent prices, and this process is known as adding or subtracting from recent prices based on the number of periods.

Many technical analysts and traders use moving averages in order to identify and evaluate support and resistance positions and this is done through the chart.

Best forex company

• Author
• Recent Posts

Mohamed Abdel Khaleq

Professional technical and economic analyst in global financial markets since 2004, holder of an MBA from the American University in Cairo. He works as an economic writer and technical analyst for many international financial companies. He writes daily economic and technical analyzes for many Arabic and English websites specialized in the field of stock exchanges and financial markets.

Latest posts by محمد عبدالخالق (see all)

• أزواج العملات النادرة في سوق الفوركس - 26 May, 2023
• Key tips for traders in Forex Market - 20 April, 2023
• Axia offers investors the opportunity to trade the most popular local stocks - 12 September, 2022