# Chapter 11, Part II. Simple Moving Average.

Discussion in 'Complete Trading Education- Forex Military School' started by Administrator, Jun 21, 2011.

Not open for further replies.

Joined:
Sep 24, 2007
Messages:
5,955
470
 Part II. Simple Moving Average.
Commander in Pips: This moving average indicator is called “simple”, because it uses a simple way of averaging.

To estimate the value of a simple moving average (SMA) you need to do three things:

1. Specify number of trading periods that must be included in calculation;

2. Specify the price type of period – close, high, low or even (High+ Low+ Close)/3. As a rule Close price is used for calculation. The possibility for using of other prices types will depend on software, because not all software allows you to calculate SMA, say, for (High+ Low+ Close)/3. So, here we will talk about SMA on Close price;

3. Calculate simple average value of these numbers.

Pipruit: ???​

Commander in Pips: You need an example, do you?

Pipruit: I would appreciate that…​

Commander in Pips: Ok, I’ll give you some, and you will help me. I suppose you can answer at least on points 1 and 2…

Pipruit: No doubt, I can… So, I offer to calculate 50 period SMA and…​

Commander in Pips: Wait a minute - 50-period for a manual calculation is too much. Take a shorter period. The algorithm will be the same, but I will not have to post here huge tables with numbers. Think about your self – you will have to investigate all these tables, and…

Pipruit: Ok, I’ve got it, I’ve got it. Let’s go with a 7-period SMA. And we will apply the close price for calculation.​

#1
Lasted edited by : Mar 7, 2016
Hamza Samiullah and fran alvarez like this.