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30.01.2014 admin
Moving Average can be based not only on closing prices but also on the mean of high-low prices. Simple Moving Average (SMA) is calculated by adding up last price datas and devide them by N number of datas. EMA maintains older data which will fade away with passing time, while SMA drops off oldest data continously. A longer Moving Average is less sensitive to price changes but produces less false signals.
Article Summary: Many trading systems build off of a good moving average crossover to spot entries and exits. When a trader begins to study the Technical Analysis of price action they will often first be introduced to Moving Averages. Moving Average Crossover: The point on a chart when there is a crossover of the shorter-term or fast moving average above or below the longer-term or slower moving average. Many traders have been to the moon and back working to find the strategy that works best for them.
The first thing to appreciate when understanding a moving average crossover is the simplicity. The moving average crossover trading strategy brings together a shorter term moving average with a longer term moving average. Although this is seen as the simplest trading strategy, the Moving Average Crossover for following trends is not without draw backs. When looking at advanced trading systems, many traders come upon the initially confusing but fully inclusive Ichimoku Trading System. Learn Forex – Ichimoku focuses on moving average crossovers in relation to the cloud. Moving Average Crosses bring the trader the benefit of time confirmed trend entries and exits while avoiding whipsaws in prices that can hurt other traders who are too quick to act on a premature move. DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.Learn forex trading with a free practice account and trading charts from FXCM.


Technical traders are confronted with many choices when it comes to which indicators to use in their trading.
Using Moving Averages can help give a trader an advantage when planning a trading strategy. The image above represents some of the more commonly used Moving Averages including a 30 (Green), 50 (Black), and 200 (Red) period MVA. Because Moving Averages represent an average closing price over a selected period of time, they do have the ability to filter out excess market noise. Some traders may choose to use more than one Moving Average as depicted in our primary graph.
Once you understand the concept and how to apply Moving average crossovers to your trading, you will see how this simple technique can work for all trader types (long, intermediate, & short term). If Technical Analysis is the attempt to forecast future price trends then Moving Averages are a worthy start. However, most traders’ strategies originate and end with a moving average crossover to time entries and exits. However, when you find a currency pair that has a history of trending and you see a moving average crossover, you can then look to enter a trade with a well-defined risk by setting your stop above or below the crossover.
Common examples are a 10 MA and a 30 MA for shorter term entries or a 50 MA and a 200 MA for longer term entries.
The moving averages give equal weighting to all prices within the period selected when applying the indicator so there is a lagging nature to the indicators ability to respond to changes in price.
Some moving averages like the Exponential Moving Average put more emphasis on the most recent price to help you react quicker to possible trend shifts. At the heart of the Ichimoku Trading System is a Moving Average crossover of the 9 and 26 period moving average. Because there can be a lot emotion behind trading and risking money, there is a natural benefit to an objective and simple strategy.
In the course, you will learn about the basics of a FOREX transaction, what leverage is, and how to determine an appropriate amount of leverage for your trading.


More often than not Forex traders, at one point in their career, turn to Moving Averages (MVA’s) for finding market trends and momentum. These indicators are technical tools that simply measure the average price or exchange rate of a currency pair over a specified period of time. In these conditions moving averages will begin to bunch together as no new pricing highs or lows are created and loose their effectiveness. Take our free CCI training course and learn new ways to trade with this versatile oscillator.
Once you understand moving averages, you can then apply two moving averages and find an entry and exit based on a crossover. If the market is in a significant uptrend, the average price over a determined period should rise and price should not weaken below the average.
Traders soon learn that following trends can offer the most reward for the least amount of work and moving average crossovers benefit from that realization. The system only looks to take buy signal crosses if price above the average of the high and low price over the last 52 periods or sell signal crosses if price is below the average of the high and low price over the last 52 periods.
Surprisingly after learning to analyze MVA’s, traders often find they are able to quickly identify different types of price action they could not pinpoint before without technical indicators on their charts.
If we are looking specifically at a 200 period moving average the indicator is adding the closing price of the last 200 candles on the graph.
Since price is trading above this Moving Average traders may prefer opportunities to buy while avoiding selling opportunities. These traders will choose a series of averages and view the trend as down when the shorter period (faster) moving average is residing below the longer period (slower) moving average. As price crosses either above or below these plotted levels on the graph it can be interpreted as either strength or weakness for a specific currency pair.



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