What is a moving average?
A moving average calculates the average price over a selected number of periods. It helps reduce short-term price noise.
Simple Moving Average
A Simple Moving Average, or SMA, gives equal importance to each price in the selected period.
Exponential Moving Average
An Exponential Moving Average, or EMA, gives more importance to recent prices and usually reacts faster than an SMA.
Common uses
Moving averages can help traders:
- Identify the general trend.
- Observe dynamic support and resistance.
- Study moving-average crossovers.
- Filter possible trading signals.