A simple moving average. Indicator MA
The history of the indicator MA:
The moving average is one of the most simple, yet popular indicators in technical analysis Forex. MA is classified as indicators of trend following, it helps to define the beginning of a new trend, and its completion, according to his inclination can be determined by (speed), it is the same as the base or the smoothing factor is applied in a large number of other technical indicators in forex. Sometimes referred to as a moving average trend line.
A simple moving average is the arithmetic average of the usual price for a certain period. The moving average is an indicator of a price equilibrium (the balance of supply and demand in the market) for a certain period, the shorter moving average, the time taken for the lower equilibrium. Averaging the price, it should always be a certain lag behind the main market trend by filtering small fluctuations. The lower the setting the moving average (say a moving average is shorter), so it quickly identifies a new trend, but at the same time making more false oscillations, and conversely the more parameter (say the long moving average), the slower is determined by a new trend, but received less than spurious oscillations.
The use of the trade:
Moving averages predicts no change in the trend, but only about the beep has appeared trend. Since moving are the trend-following indicator that they are best used in times of a trend, and when the market trend is not present, they become totally ineffective. Therefore, before using these indicators is necessary to conduct a separate analysis of the properties of a particular currency pair trendiness. In its simplest form, we know several ways to use a moving average.
The definition of forex trading using moving average. If it is directed upwards, then you make a purchase only if you down - it was only selling. The points of entry and exit are determined on the basis of other methods (including those based on the faster moving). Spread the moving average from the bottom up with a positive slope of the chart is seen as a buy signal, the moving average spread from top to bottom with a negative slope of the chart is seen as a signal to sell. The intersection of the price of its moving average from the top down (with a negative slope of both) is regarded as a sell signal, price crossing its moving average from the bottom up (with a positive slope of both) is considered as a buy signal. The intersection of the long moving average from the bottom up short is seen as a buy signal and vice versa. Moving averages with circular parameters (50, 100, 200) are sometimes seen as moving support and resistance levels. Based on what moving straight up and down which determine what the trend is up and which down (short, medium and long term). The moments of greatest divergence of the two averages with different parameters is understood as a signal for a possible change in trend.