Using moving averages is half the battle.
Now let’s look at moving averages.
1. Moving Average The English name of moving Average is Oving Average, referred to as MA.
By averaging past closing prices over a period of time.
Traders can use it to judge market price movements and develop trading strategies.
Moving averages of different time lengths have different sensitivity to price fluctuations, and the corresponding smoothness is also different.
Short-term moving averages tend to be sensitive, fluctuating with the fluctuations of the K line, close to the change of the K line;
Long-term moving averages are relatively flat to price movements.
In forex trading, most people choose 21MA.
Therefore, it is also recommended that beginners choose a moving average with a length of 21 in order to estimate the market more accurately.
2. In addition to Simple Moving Average (SMA), there are Exponential Moving Average (Exponential Moving Average).
EMA, Smoothed Moving Average (SMMA) and Linear Weighted Moving Average (LWMA).
An exponential moving average is also known as an exponentially smoothed moving average.
The latest moving average value is calculated as a percentage of the current closing price plus a percentage of the previous index moving average.
Relatively speaking, the weight influenced by the current closing price is larger, that is, it can reflect the recent trading behavior of traders.
The first average of the smoothed moving average is calculated in the same way as the MA, from which the sum of the first n ? 1 data points is calculated, plus the current closing price, the second average can be obtained by calculating the average, and so on.
In contrast to MA, SMMA does not remove the old price, but reduces the weight.
In a linearly weighted moving average, the time period is the coefficient, so the weight of the new closing price is greater than the weight of the old closing price.
By calculating the average value of the product of the serial number of different time periods and the corresponding closing price.
The overall trajectory trend of the different types of moving averages is the same, but the precision is different because of the different weights placed on the closing prices of different periods.
The two most commonly used are SMA and EMA, which is more accurate.
3. How to Use Moving Averages (1) Compare the position relationship between moving averages and price charts to determine the future trend of price changes.
The moving average represents the average price over the most recent period, which indicates that if the current market price is above the moving average, it means prices are more likely to rise;
Conversely, if the current price is below the moving average, it means the price is likely to fall.
2) Using the moving average to determine the timing of the entry by the position relationship between the moving average and the K line, you can predict the trend of the price up or down.
When the market price is close to the moving average, determine that the price will not continue to fall, can enter the market.
There are four situations in the position relationship between the K line and the moving average, namely, two similar tangent situations, namely, the K line rises first and then falls, or the K line falls first and then rises;
There are two similar crossover cases, that is, during the rise of line K or during the fall of line K.
3) Market trends can be judged by using multiple moving averages over different time periods to increase the probability of profit MA.
If multiple MA with different time periods are adopted, the timing of entry will be higher and the probability of profit will naturally increase.
How to use MA in different time periods?
In fact, there are two ways.
The first is to open the K-line chart for different time periods and switch to view the position relationship of 21SMA.
This method of analyzing in different charts is not efficient.
Therefore, the second method is often used.
Will be used to convert SMA of different time lengths to 21SMA in the same time frame.
For example, they convert to 21SMA in one hour, and 21SMA in a 4-hour time horizon is 4*21SMA=84SMA in a 1-hour horizon;
When the 21SMA of the day is converted to an hour-long chart, it is 24*21SMA=504SMA.
Also, it can be converted to 30 minutes, 4 hours, etc.
The Fed may step on the accelerator as global central bank resolutions come thick and fast.
Please pay attention to the specific operation, the market is changing rapidly, investment needs to be cautious, the operation strategy is for reference only.
