What is moving average?

<p>A moving average (MA) is a commonly used technical indicator that smoothens out the price trends by clearing out the “noise” from random price fluctuations on the short-term basis.&nbsp;</p>

<p id="isPasted">Moving averages are used in technical analysis to represent the average closing price of the market over a certain period of time. Moving averages are often used by traders because they offer a good indication of market momentum.&nbsp;</p><p>Simple moving average (SMA) and exponential moving average (EMA) are two of the most commonly used moving averages. There is a difference between these moving averages in that the simple moving average does not weigh the averages of the data set whereas the exponential moving average will weigh the current price more.</p><p>The moving average is primarily used to eliminate short-term fluctuations in the market. A moving average represents the closing price averaged over a selection of time periods, allowing traders to easily identify the overall trend of the market.</p><p>Another benefit of the moving average is that it can be customized, so the trader can choose the timeframe that best suits their trading objectives. Market entries are often based on moving averages as well as possible levels of support and resistance. Moving averages are often used as resistance levels when the price is below them and as supports when the price is above them.</p>

<p>Moving averages smooth the price data to form a trend following indicator. They do not predict price direction, but rather define the current direction, though they lag due to being based on past prices. Moving average preference depends on objectives, analytical style, and time horizon. Chartists should experiment with both types of moving averages as well as different timeframes to find the best fit.</p>

<p>In forex trading, moving averages are frequently used, especially over 10-, 50-, 100-, and 200-day periods. These strategies are not limited to a single timeframe and can be used for both day-trading and longer-term investing. You can use moving averages as standalone indicators, or as envelopes, ribbons, or convergence-divergence strategies. As a lagging indicator, moving averages do not predict where prices are going, but rather provide information about where they have been. In markets with strong trends, moving averages, and the strategies associated with them, tend to work best.</p>

<p>The moving average (MA) is one of the most commonly used technical indicators for forex traders. The formula is used to calculate the average movements of a market over a longer time period (often weeks or months, rather than days) in order to identify trends.&nbsp;</p>