Sunday, November 12, 2006
Forex Day Trading System - What is moving average?
Forex Day trading System - Learn what is a moving average
To help understand moving averages, in a given series, a sample of consecutive candlesticks may be referred as a “time window.” If the candlesticks (e.g., closing prices) in a given chart (1 hr or 15 min. or any chart) were added together, and the sum divided by the number of candlesticks in the sample, an “average” gets calculated. So, lets say if on 1 hr chart, you take 10 consecutive candlesticks and calculate its average, you have got average of 10 candlesticks.
However its not a moving average yet..Once you calculate the average of 2nd to 11th candlestick, you have got the next 10 candlestick average..Do it with 3rd to 12th candlestick and its the next average..Repeat it on your chart and now you have got a moving average..
Same process can be repeated with 50 candlesticks and you'll calculate the 50 period moving average..Understand this to learn forex trading online.
You must have noticed that equal weightage is given to all candlesticks in a sample..Thats why its called simple moving average..If you gave more weightage to recent candles, its called exponential moving average..Your charts will calculate that automatically for you..The only thing you have to do is specify the time period..
Generally, Exponential Moving Average (EMA) is more common now a days in all the common forex day trading system..
How to use the moving averages?? Generally the moving averages indicate the momentam..If a fast moving average crosses above the slow moving average, the market is considered to be bullish..For. E.g. if 10 EMA crosses above the 50 EMA , it can be considered that the market has turned bullish..
Thats all in today's session in series on Forex Day Trading System
To help understand moving averages, in a given series, a sample of consecutive candlesticks may be referred as a “time window.” If the candlesticks (e.g., closing prices) in a given chart (1 hr or 15 min. or any chart) were added together, and the sum divided by the number of candlesticks in the sample, an “average” gets calculated. So, lets say if on 1 hr chart, you take 10 consecutive candlesticks and calculate its average, you have got average of 10 candlesticks.
However its not a moving average yet..Once you calculate the average of 2nd to 11th candlestick, you have got the next 10 candlestick average..Do it with 3rd to 12th candlestick and its the next average..Repeat it on your chart and now you have got a moving average..
Same process can be repeated with 50 candlesticks and you'll calculate the 50 period moving average..Understand this to learn forex trading online.
You must have noticed that equal weightage is given to all candlesticks in a sample..Thats why its called simple moving average..If you gave more weightage to recent candles, its called exponential moving average..Your charts will calculate that automatically for you..The only thing you have to do is specify the time period..
Generally, Exponential Moving Average (EMA) is more common now a days in all the common forex day trading system..
How to use the moving averages?? Generally the moving averages indicate the momentam..If a fast moving average crosses above the slow moving average, the market is considered to be bullish..For. E.g. if 10 EMA crosses above the 50 EMA , it can be considered that the market has turned bullish..
Thats all in today's session in series on Forex Day Trading System
