Forex : Technical Indicators : Moving Average

I Talked in previous article about The Kinds of Technical Indicators you can read it through this link

Today I will show you Moving Average and how to use it in Forex trading

Moving Average Indicator

.The Function : Determining the general trend of the market during specific period

Whenever the (MA) indicator expresses for a long time whenever it was slower , and when it was expresses for a short time whenever it was faster

This indicator is provided on Metatrader program , we can add it by clicking on indicators then trend then Moving Average

Moving  Average is the simplest way to determine the movement of price easily a period of time

If The Price traded above of Moving line that mean it's in bullish -

If The Prices was traded under of Moving line that mean it's in bearish -

: Moving Average indicator calculated as follows

By the collection of closing prices for the currency pair through a group of days then dividing this collection on the number of these days

.Example : (1.2345 + 1.2350 + 1.2360 + 1.2365 + 1.2370) ÷ 5 = 1.2358 The price of Moving Average

The Moving Average like any indicator , used in expecting currency movement and through looking to the Moving in ramp shape , you can get outlook for the price and to determine to where it will go

The Kinds of Moving Average

: There're many kinds of moving averages but we will focus two kinds only

SMA - Simple Moving Average -

EMA - Exponential Moving Average -

The Question now : which one the best in technical analysis ? Simple or Exponential

I would like to remember you that the most of chart programs which you using in technical analysis will calculating the moving automaticly for you , but the important to know how to calculate it as I explained previously , If you know how to calculate Moving Average you will can take a decision which one best for you

Firstly : SMA - Simple Moving Average

Used in determining the general trend for the currency -

Few fake signals -

The Movement is slow and It gives information slowly -

It's Late to give entry signal in the deal -

It's miss many opportunities -

Secondly : EMA - Exponential Moving Average 

Used in determining entry points in the deal - 

It's fast in its movement and it's give information rapidly - 

Sometimes It gives fake information about the truth because it moves rapidly - 

? How We Use Moving Averages Indicators in Our Trade

: The Breakout Way

If The candles of prices break the moving line from the bottom and headed to high ,we open buying deal when a green candle appear

If The candles of prices break the moving line from the high and headed to bottom ,we open selling deal when a red candle appear

: The Intersections of Moving Averages with each other

The entry with intersections of the moving averages with each other is the favorit way for many traders and I prefer it too and I advice you to use it , it includes using more moving lines on the chart at the same time and in case if the moving averages intersect with each other ,here this selling signal or buying signal

If Exponential Moving Average breaks the Simple Moving Average from bottom headed to high : we open buying deal

If Simple Moving Average breaks the Exponential Moving Average from high headed to bottom : we open selling deal

Moving Averages and Time Frames

Time Frames are very important in determining the important of Moving and I advice to make a tests on the different time frames for the same currency pair each time and choosing what suits to your trade

: Notes

You must care about determining the best time frame whether for the chart or for the moving itself -

Best time frames with Moving is 1H frame and 4H frame -

Whenever the time frame is longer whenever we reduced the wrong signals -