What is Moving Average? Forex Trading Indicators

What is moving Average?

     Moving Average Indicator shows the price value for a definite time period. When trader calculates the moving average, one averages the price for this time period. As the price movements, its moving average either increases, or decreases.Four Types of Moving Averages are as follows.

• Simple Moving Average (SMA)
• Exponential Moving Average (EMA)
• Smoothed Moving Average (SMMA)
• Linear Weighted Moving Average (LWMA)

SMA Calculation:

          SMA = SUM (CLOSE, N) / N

N – Number Calculation Period

EMA Calculation:

          EMA = (CLOSE (i) * P) + (EMA (i - 1) * (100 - P))

CLOSE(i) — the price of the current period close
EMA(i-1) — Exponentially Moving Average of the previous period close
P — the price value percentage

SMMA Calculation:

          SMMA (i) = (SMMA(i - 1) * (N - 1) + CLOSE (i)) / N

LWMA Calculation:

         LWMA = SUM(Close(i)*i, N) / SUM(i, N)

SUM(i, N) — The total sum of weight coefficients