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| Indicators: Moving Averages |
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| Written by Administrator | |
| Tuesday, 18 November 2008 | |
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Moving Averages (MA)are probably the most common indicator in use. The popularity of the indicator comes from its ease of use and understandability. By default, the MA gives a clear picture of where price has tended to be, and though it follows behind price action, you can often couple the MA with other indicators to trade successfully. In this chart there are Simple Moving Average’s (SMA) attached with both a 3 and 8 period SMA. Often times for shorter term time frames, trades like to use numbers that are from to the Fibonacci series. These being 1,2,3,5,8,13,21,34 and 55 just to name a few.  For longer term charts, such as the daily chart below, numbers that correspond with the number of days in the trading week as well as the number of days in the trading month are common. However, there will always be the person that says “well if so and so is using a 5, 21 cross, I’ll beat them at their game and use a 3, 13”. In the end it really doesn’t matter. What will matter will be that you apply your rules consistently. 
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