You have to adapt your strategy/system to it. A lag has a purpose - it exists to ensure that a reversal is strong enough. You have to understand that lag in MA is not something you have to fight against. Still, Simple MA (SMA) and Exponential MA (EMA) are the oldest and they remain the most used moving averages in technical analysis - you may see them on a stock chart below As of now, there are a row various Moving Averages: Double Exponential MA (DEMA), Triple Exponential MA (TEMA), Hull MA, Kaufman Adaptive MA (KAMA), Volatility Index Dynamic Average (VIDYA) and etc. Over the past hundred years there were many attempts to improve MA. One of the most popular ways to generate trading signals in technical analysis is to apply MA to an indicator as a Signal Line and to generate signals on the crossovers of this indicator and its MA.Ī Moving Average is a lagging indicator. Many indicators use MA to smooth and to average itself. There are many indicators based on Moving averages. Almost all technical studies use MA in one or another way. You may confidently say that there would be no technical analysis without a moving average. This is the simplest and the oldest technical indicator. You may find them in various technical indicators as components in calculations, as signals lines, smoothing tools and etc. Moving averages (MA) are considered as basics of technical analysis.
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