How are moving averages used in trading?
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  1. #1
    Join Date
    May 2006
    Posts
    126

    Default How are moving averages used in trading?

    As a beginner, I could only say that I am researching about this fx trading and learning the trade so I would like to share what I got in today and hope this will also help neophytes like me: (from investopedia.com)

    How are moving averages used in trading?

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    Moving averages are very popular tools used by technical traders to measure momentum. The main purpose of these averages is to smooth price data so traders can be in a better position to gauge the likelihood that a current trend will continue. Moving averages are commonly used to predict areas of support and resistance and are also used in conjunction with other indicators to help give more accurate entry/exit signals. There are different types of averages that vary in popularity but, regardless of how they are calculated, they are all interpreted in the same manner.

    A crossover is a popular trading signal that occurs when the price of an asset crosses through a moving average, or two moving averages cross over each other. This type of signal is regarded as an early indication of the direction of future momentum. For example, traders wishing to enter into a long position will buy an asset when the price crosses above a moving average and sell the asset when it crosses below. As you can see from the chart below, upward momentum increases when a short-term average crosses above a long-term average.

  2. #2
    Join Date
    May 2012
    Posts
    8
    u should start with school of pipsology first

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