# Moving Average Question

Hi guys.
While experimenting with [B]moving averages[/B] did get confused with all MA methods…
[U]Simple[/U], [U]Exponential[/U], [U]Smoothed[/U], and [U]Linear Weighted[/U].
Any quick explanation for them please.
Thank you.

You have to understand that a “quick explanation” — which is what you asked for — will be an over-simplification.

But, you asked for it, so here it is —

I assume that you understand the concept, and the method of calculating, a [B]Simple Moving Average[/B].

Let’s say you’re looking at a 14-period simple moving average. Each of the 14 periods has the same effect on the average.
In other words, if there was a large spike in the first period, the average will be affected to the same degree as if the spike came in the last period.

Suppose you want to reduce the importance of the earlier periods, and increase the importance of the later periods. You could
do that by “weighting” the periods sequentially — that is, the more recent the period, the more “weight” it gets in the average. There are two popular ways to sequentially weight a series of values: with a linear weighting formula, or with an exponential weighting formula. When applied to moving averages, the first method produces a [B]Linear Weighted Moving Average[/B], and the second method produces an [B]Exponential Moving Average[/B].

Finally, what if you want to smooth the “noise” out of a moving average — i.e., moderate the highs and lows, and make a smoother curve out of the plotted line? You could do this by using a moving average of a moving average. This is called a [B]Smoothed Moving Average[/B]. You could even calculate a [B]Double-Smoothed Moving Average[/B], which is a moving average of a moving average of a moving average (if you’re REALLY sinking into Indicator Insanity).

Clint

Thanks Clint.

Everything clear.

very good explaination i’ll bookmark this post

[B]To further on Clints excellent explanation…[/B]

The DEMA is a double smoothed moving average.

and the TEMA is a triple smoothed moving average.

These indicators are found in the [U]indicator selection part[/U] of your forex charting program.

In computer code, a simple moving average is written “sma”, an exponential as “ema”, and weighted as “wma”.

[B]So a simple moving average of 20 periods is written…[/B]

av = sma([B]close[/B], 20);

[B]A double smoothed exponential is written…[/B]

av = ema(ema([B]close[/B], 20),20);

[B]A triple smoothed exponential with a given period is written…[/B]

av = ema(ema(ema([B]close[/B], period), period), period);

Note that the number of brackets on the left must equal the number of brackets on the right.

“close” is the closing price of the particular candle or price bar.
You can choose between [B]“close”, “open”, “high” or “low”.[/B]

The semi-colon at the end finishes the computer code statement.