Indicator - Moving Average
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Definition Moving Average
Several types of moving averages are available including Simple, Weighted, Exponential, Triangular, End Point, Time Series, Zero Lag Exponential, Wilder, and Hull.
Calculation Moving Average
Simple Moving Average = (Close+PreviousClose+..Close([P-1] periods before)/P. P is the number of periods.
The Exponential Moving Average gives a stonger weighting to the most recent prices and thus reacts more to recent price changes.
Exponential Moving Average = (close of the day * %exponential)+(yesterday's moving average * (100-%exponential)). %Exponential=2/(period+1)
Weighted Moving Average =(P1Ct+P2C(t-1)+...+PnC(t-n))/(P1+P2+...+Pn), P is the number of periods period and Ct the close at the date t.
Triangular Moving Average is a simple moving average with a double smoothing applied to it (moving average of a moving average).
Interpretation Moving Average
Moving averages are one of the most popular technical analysis tools. They are useful in highlighting a trend because they display the average price of a security at a given time.
A short moving average rising above a long moving average may indicate an upward trend and a short moving average falling below a long moving average may indicate a downward trend. You can also use only one moving average and compare it with the price.
In addition to the type of moving average, you can choose the type of price it is applied to (for example open instead of close), number of periods, horizontal shift and vertical shift.
