Moving Average indicator
Moving Average is a legendary indicator among technical analysis indicators. Yet none of the available indicators was as relevant and popular as this moving average. Why? Because with this indicator traders from various exchanges earned as much money as using all other indicators together.
Moving Average is used in virtually all trading strategies and tactics of trading. Since it is moving average that can better than anything show any changes in local and global price movement trends by the price chart coordinates.
Moving Average indicator is included in most trading platforms and is constantly used by traders around the world. Specified technical tool can be used both individually and in combination with other tools. At the same time moving average can give signals when you are trading both with the trend and against its movement.
According to the algorithm of its work, Moving Average conducts calculation of the average value specified in the interval history settings. That is, the procedure of its work is averaging out the price indices. This is why Moving Average is referred to by traders as "moving average."
Signals for trading off Moving Average
- the very first indicator signal is the change of the direction of its movement on the chart. If moving average leaned down - we sell. If it is looking up - we buy.
at the same time, due to the fine settings adjustment, indicator parameters can be set on a different degree of price changes, thus filtering out spurious oscillations of the moving average.
- the use of multiple moving averages of different periods allows to see the point of entry into the market more specifically, as the signal from them comes much earlier than from one moving average.
- moving average can be used in conjunction with several indicators at once. For example, in conjunction with the MACD indicator, moving average helps to more effectively identify the places of local trends change or trends reversals.
Moving Average implementation specifics
The use of moving averages, as a rule, is carried out on any time frame and any financial instrument. However, moving averages with longer periods work better in the long term evaluation of the price movement. Moving averages with lesser periods are good for showing short-term changes in price quotes. At the same time, when using the moving averages of different time-frames it is possible to build an entire trading system that can outrun any of the strategies built on other indicators in profitability. However, Moving Average, as well as almost any other indicator loves trend at which it becomes simply irreplaceable. At the same time, with the flat market, the moving average is almost not effective. However like any other technical indicator.
Signals provided by Moving Average are useful for any type of options trading. However, do not forget that you must select the different parameters of indicators, including moving averages, for each binary option specific expiration term.