If we previously discussed a lot of moving averages, now it’s time we conclude the discussion to be an overview.
- There are many types of moving averages, but the most commonly used are Simple Moving averages (SMA) and Exponential Moving Average (EMA).
- The simple moving average is the simplest type of moving average but is very vulnerable to a momentary price spike.
- The Exponential moving average focuses more on current price conditions, which means more prioritizing the condition of the trader at this time.
- It is more important to know what a trader is doing now than to know his condition in the past.
- The simple moving average is smoother than the exponential moving average.
- Moving averages with longer periods are finer than shorter moving averages.
- Using exponential moving averages can help you see faster price movements but can provide false signals.
- A smooth moving average provides a slower response to prices but can save when there is a sudden surge in prices and false signals but you will be late to enter the market so that you will lose a little chance of profit.
- You can use a moving average to determine trends, enter the market and see when a trend will end, and reverse direction.
- Moving averages can be used as dynamic support and resistance level points which always change in value according to market price movements.
Now you know whether it’s a moving average, its types, and how to use it. then now is the time for you to practice by opening your trading platform. Good Luck And See You Later Soon!