Hi everyone, so these are definitions from the Elementary School, Grade 4 topic. They seem contradictory to me, can anyone explain why in the first it says “it is susceptible to spikes” and a few lines below it says “will save you from spikes”.
Simple moving averages are the simplest form of moving averages, but they are susceptible to spikes
Simple moving averages are slower to respond to price action but will save you from spikes and fake outs .
welcome to baby pips , have a very good journey, hope for the best
The contexts are different:
A simple moving average is the sum of all values for a number of instances divided by the same # of instances. So sharp volatile moves influence more movement on the SMA, compared to other types of moving averages.
This is a relative comparison to price action. If the price is in an uptrend but suddenly reverses to a downtrend over 3 consecutive candles the SMA will not react as quickly, as the price action, and will not start trending downwards immediately in all instances.
Thanks a lot, that was a useful clarification !
Thank you! same to you!