The moving average price or moving average or MA for short is just a way of smoothing price action over time.
The price will be taken from the average of a certain period for example, 5 days, 20 days, or 100 days to form a trend line.
Moving average chart:
Just like any other indicator, the MA indicator is used to capture future price signals.
By looking at the slope of the MA, traders can determine the potential direction of the price more accurately.
There are several types of MA and each type has a different level of "fineness".
The smoother the MA, the slower it reacts to price movements.
The rougher the MA, the faster it will react to price movements.
To make the moving average smoother, you should look for the average closing price over a long period of time.
On this occasion, we first need to explain the two types of MA:
Simple
Exponential
We will also discuss how to calculate it and provide the pros and cons of each MA. Just like the previous lessons on BabyPips.com, you need to know the basics first!
After mastering the basics well like Lionel Messi mastered the technique of football games, we will only teach the practice of applying MA into trading strategies.
By the end of this lesson, you will understand moving averages smoothly, as smoothly as Messi plays ball!
Are you ready?
If not, go back to the beginning of this lesson paragraph and reread it.
Once you are ready, please go to the next page.