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Chapter 11, Part VIII. Summary of Moving Averages.

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

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  1. Administrator

    Administrator Just Administrator :-)

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    Part VIII. Summary of Moving Averages. [​IMG]
    Commander in Pips: Ok, here is fast look back at MAs. Let’s just point out the most important qualities of them:

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    1. There are a lot of different types of MA – simple, exponential, modified, smoothed, centered, weighted and maybe some others. But the most common are simple and exponential ones;

    2. Any MA has two major parameters – the number of periods and price type. The number of periods shows how many trading periods will take part in the calculation of a particular MA, while the second parameter shows which price type that will be used in calculation from each period. Usually closing price is used, but it’s not forbidden to use MAs that are based on Low, High or even (High + Low + Close)/3. Use anything that will allow you to make money!

    3. A special parameter of MA is displacement, sometimes it named as “Shift” or “Offset”. This parameter allows you displace MA forward or backward in time for a number of periods that you specify. This tool depends on the possibilities of your trading software and could be applied to any MA, because it does not depend on the type of MA. Displacement gives additional features to an MA.

    4. Simple moving average, as it follows from the name is the simplest among the others, and its value is just an average of price values that are used in its calculation. The SMA calculation procedure puts equal weight to all periods price, that take part in calculation;

    5. Exponential moving average (EMA) calculation puts more weight on the most recent price action.
     
    #1 Administrator, Jun 21, 2011
    Lasted edited by : Mar 14, 2016
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