Forex technical analysis indicators: summary of methods using moving averages.
There are different types of moving averages. Two of the most common types are simple moving averages and exponential moving averages;
The simple moving average is the easiest type to use in the family of moving averages, but it may have no effect on the signals given by sudden price fluctuations;
The exponential moving average is more concerned with recent price changes, which means that it is more focused on the current behavior of traders;
For us, knowing what traders are doing now is more important than knowing what they are doing last week or last month;
The simple moving average is smoother than the exponential moving average;
Long-term moving average is smoother than short-term moving average;
Using exponential moving averages can help you discover the arrival of trends earlier, but the signals sent can also deceive investors;
The simple moving average is smoother and it responds more slowly to price changes, but it can protect traders from false information sent by sudden price fluctuations. However, due to the slow movement of the simple moving average, its judgment on the arrival of new trends is also lagging behind, which will also let traders miss the best time to enter the market;
You can use the moving average to help you determine the trend, determine when to enter the market, determine when the trend is coming to an end;
Moving average can be used as dynamic support and resistance;
The best way to use the moving average is to draw moving averages of different periods on the technical graph, so that you can understand the trend of the long-term and short-term moving averages.
Do you understand the above points? Then please open the technical graphics and start using the moving average.
Remember, the use of moving averages is fairly easy. The difficulty is to determine which moving average should be used.
This is why you should first use them one by one, and then judge which kind of moving average is best for your trading style. Maybe you prefer a trend-following system, or maybe you want to use them as dynamic support and resistance.
No matter how you choose, make sure that you have carefully studied different types of moving averages and tested their use many times to determine whether it is suitable for your overall trading plan.