Tuesday, September 11, 2018

How to Learn to Use the Moving Average Indicator

How to Use Moving Average Indicators in Forex and Binary Trading

Moving Average itself is a trend type sign, which is a sign used to ensure the current trend in the market.

Basically MA can be used for some of these things:
1. Ensuring trends that will also take place.
2. Ensure the point of support and resistance.
3. Smooth different marks that are very jagged.

Moving averages have three different variants, namely
Simple Moving Average (SMA)
Exponential Moving Average (EMA)
Weighted Moving Average (WMA)

1 1.Simple Moving Average (SMA)
Simple Moving Average (or commonly referred to as Moving Average only or abbreviated as SMA) is the simplest Moving Average and does not use its weighting in the calculation of the closing price movement.

2. Weighted Moving Average (WMA)

The first question that arises in our mind is what is the inequality of high school with WMA? There is definitely an inequality. It's quite different to be classified into two sides.

Not much different until their names are similar because they use the same methodology, only different steps.

Think of it this way: Which price has a greater emphasis on estimating upfront prices, the price of the last hour we have or the price of two months. then what do we have? It's definitely the last hour.

At least the latest price movement is not more than one hour more representative in estimating upfront prices when compared to the price of two months. yesterday.

The following assessment weights are arranged by WMA. In high school, the weight of each price both two weeks ago and two days ago has the same weighting rating. At the latest WMA data has a weight that is greater in value than the prices first.

Weighting the value in WMA will also depend on the length of the period we specify. The longer the period is decided, the greater the weighting obtained in the most recent data.

Overall, the provisions on WMA are the same as in high school because the same calculation step only has an inequality in weighting values.

But, is the way to weight the WMA is the fastest way to weight change trends? No. In WMA the weighting is done not to enter the WMA value first.

In the next section we will also look at the way of moving averages involving the exponential role in weighting them. Finally, the sign of the transition can be earlier.

3. Exponential Moving Average (EMA).

EMA is a refinement of the high school method. As we know that weighting high school is the cause that causes delays in the sign of a trend change.

Giving weight to XMA is similar to WMA, involving periods. It's just the inequality if the WMA is the longer the period we use, the greater the weight of the last value, so in XMA it goes the opposite, the longer the period we use, the smaller the last weight we use.

Overall, the provisions in XMA are the same as in high school because the same calculation step only has an inequality in weighting values.

High School, WMA, Which EMA Is Better?

Now this is probably the last question left from our Moving Average study. Which of the MA variants is the best?

Diliat from giving a bullish or bearish sign is indeed the EMA is a sign that can give an earlier sign than the two.

Certainly so because after all XMA was created to eliminate the shortcomings of its predecessor MA variants. But if the question is which one is better, this becomes so relative to the user.

So tips, the more sensitive one sign is, it will also be so helpful to estimate prices.

But on the contrary, the more sensitive it will be, the more false signals will be made, which means that the sign may be wrong or does not work long. That cause again depends on the trader.

If you are someone who prefers a more "safe" game, maybe high school is more fitting than the other variants.

And so on the contrary if you like games that are more risky (those who dare to get profit will also be as big as the possibilities that might take place) so XMA is better according to you because it is more responsive and faster in marking.

If you are someone who adheres to the "central axis", please use WMA. What is certain is that the sign is only one instrument, it is we who ensure the provisions are based on the instrument's guidelines.

Indeed, if the calculation is done through the Mean Percentage Absolute Error (MAPE), then EMA will also give a smaller error than the others. But still it's not meaningful


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