Moving Averages: EMA, SMA and WMA
Moving Averages (MAs) are among most commonly used indicators in Forex. They are easy to set and easy to interpret.
Speaking simple, moving averages simply measure the average move of the price during a given time period.
How to use Moving Averages
Moving Average is a trend indicator.
Besides its obvious simple function a Moving Average has much more to tell:
In Forex moving average is used to determine:
1. Price direction - up, down or sideways.
Types of Moving Averages
EMA - Exponential Moving average - gives priority to most recent data, thus reacts to price changes quicker than Simple Moving Average.
WMA - Weighted Moving Average - puts emphasis on most recent data an less - on older data.
Most common settings for Moving Averages in Forex
Try and test and then choose your favorite set of Moving Averages.
Moving Average Video Presentation
Other versions of Moving Averages
Besides traditional EMA, SMA and WMA indicators, there are several other types of MAs available to Forex traders: