Moving Average (MA) indicator [Trend Indicator]
Moving Average (MA) — биржевой индикатор, отражающий среднее значение ценового показателя выбранного актива за определенный временной период. В расчете Moving Average indicator The mathematical averaging of the asset price for the selected period, which is usually indicated in brackets after the indicator name, is used. The resulting average value is in direct correlation with the price movement.
Standard terminal indicator MetaTrader 4.
Exchange traders in practice use several types of indicators Moving Average:
— простое (арифметическое) скользящее среднее — Simple Moving Average,
— экспоненциальное скользящее среднее — Exponential Moving Average,
— сглаженное скользящее среднее — Smoothed Moving Average,
— взвешенное скользящее среднее — Linear Weighted Moving Average.
Value indicator Moving Average can be calculated for any sequential set of data, for example: opening and closing prices, maximum and minimum prices, trading volume, values of other indicators. Sometimes the MA indicator is used to calculate the moving averages themselves.
The main difference between the different types of indicator Moving Average: weighting coefficients that are assigned to the latest data. With a Simple Moving Average, prices over the period are weighted equally. Exponential and Weighted Moving Averages focus on recent prices.
Moving Average indicator signals
Most often when using indicator Moving average its dynamics are compared with the dynamics of the price chart. Signal to buy occurs when the price chart is above the MA indicator, but if the price is below the moving average, we get sell signal. Such a trading system cannot be used in the market as the main one, because it has a noticeable delay from the beginning of the trend movement, however Moving average is often used as a filtering indicator for determining the market trend.
By analogy with the price chart Moving Average can also be applied to indicators. If the selected indicator (more often it will be an oscillator) rises above its moving average, upward trend will continue. If the indicator falls below the MA, the downward movement will continue.
The formula for calculating the Moving Average indicator:
Indicator Simple Moving Average or simple Moving Average is calculated as a simple average of the closing (opening, etc.) price for a selected number of periods.
SMA = SUM(CLOSE, N)/N,
Where:
— SUM — сумма;
— CLOSE (i) — цена закрытия текущего периода;
— N — число периодов расчета.
Indicator Exponential Moving Average or Exponential Moving Average is calculated by adding a certain fraction of the current closing price to the previous value of the MA indicator. In the case of EMAs, the latest closing prices have more weight.
EMA = (CLOSE(i)*P)+(EMA(i-1)*(100-P)),
Where:
— CLOSE(i) — цена закрытия текущего периода;
— EMA(i-1) — значение MA предыдущего периода;
— P — доля значения цен.
Indicator Smoothed Moving Average or Smoothed Moving Average is calculated in two steps:
The first value of the indicator is calculated by analogy with a simple muving:
SUM1 = SUM(CLOSE, N),
SMMA1 = SUM1/N.
The values are then calculated using the following formula:
SMMA(i) = (SUM1-SMMA(1)+CLOSE(i))/N,
Where:
— SUM — сумма;
— SUM(1) — сумма цен закрытия (отсчет от предыдущего бара);
— SMMA (i — 1) — SMA предыдущего бара;
— SMMA (i) — SMA текущего бара за исключением первого;
— CLOSE (i) — текущая цена закрытия;
— N — период сглаживания.
Indicator Linear Weighted Moving Average or Linear Weighted Moving Average is calculated as follows: the latest data are given a higher weight, the early ones a lower weight. LWMA is calculated as multiplication of each of the closing prices by a certain weight coefficient.
LWMA = SUM(Close(i)*i, N)/SUM(i, N),
Where:
— SUM — сумма;
— CLOSE(i) — текущая цена закрытия;
— SUM (i, N) — сумма весовых коэффициентов;
— N — период сглаживания.