Many friends always ask why must use the Moving Average? Are not other more sophisticated indicators are also more scattered? Make no mistake, the Moving Average you can do anything to the performance market. Since the foundation of all forex indicators derived from the Supreme Court.
Moving Average is an indicator of the trend type, ie function with indicator to determine the trend is happening in the market. Its use is very wide and not just in the world of forex, if you never played the stock and use technical analysis, then surely Moving Average is also used there. Indeed, technical analysis are universal and can be used in every market that uses the data collectively.
This time we will really focus on discussing the moving average. One of the basic techniques in technical analysis to determine whether the price of a stock or foreign exchange has a better chance to strengthen, or weaken. Every trader is an analyst or as well as a fundamental, but by understanding the types of indicators like Moving Average will bring a broader understanding of trading.
A common way to interpret the Moving Average is to compare the price dynamics of price movement. When the instrument price rises above the Moving Average, it will display a Buy signal, and vice versa, when the price is below the MA, it will display a sell signal.
Trading system based on the Supreme Court is not advisable to enter transactions at the lowest price and close deals at higher prices. Moving Average works based on trend. For opening a position as soon as the price reaches the Buy low and Sell positions after prices reached the highest score.
Moving average there are three kinds, namely the Simple Moving Average (SMA), Weighted Moving Average (WMA), and the Exponential Moving Average (EMA). There was also the Cumulative Moving Average (CMA) and the Modified Moving Average (MMA).
We focus to one area of MA that is high school. Why should high school? Because the MA branch is more often used trader in the world compared to other MA.
For example, the analysis of the fundamental and psychological considerations, we tried to predict that the price of X will rise in the near future. To be more sure, we use the high school. Apparently, the chart indicates that the red and green lines intersect each other where the red line above the green line and usually are almost always like that.
Rarely, we predict that the price of X will rise but high school shows just the opposite. So we conclude that the price of X will rise in the near future!. That’s about how to analyze the market using the Simple Moving Average.