DaytradeTeam Profitzzz
Recaps of DaytradeTeam Trading Systems Performance
Monday, August 15, 2005
Moving Averages--Simple and Exponential
Moving averages are common indicators used by almost every active trader. By looking at the average price over a period of time, moving averages actually smooth out data series to help day trading and swing trading analysts see the overall trend of the issue.
There are two common types of moving averages:
Simple Moving Average--A simple moving average is formed by finding the average (mean) price of a stock or index over a specified number of periods. A period can be a day, a week, 5 minutes, etc. For example: a 15-day simple moving average is calculated by adding the closing prices for the last 15 days and dividing the total by 15. A 30 minute moving average, which might be used by our Day Trading Systems is calculated by adding the closing prices for the last 30 one-minue time periods and dividing by 30.
Exponential Moving Average--In order to reduce the delay associated with simple moving averages, technical analysts will often use exponential moving averages (also called exponentially weighted moving averages, or EMAs). EMAs reduce the delay by applying more weight (importance) to recent prices relative to older prices. In other words, an exponential moving average will react quicker to recent price changes than a simple moving average.
Most Swing Traders prefer Exponential Moving Averages to Simple Moving Averages, but both are often used as parts of our various trading strategies.
There are two common types of moving averages:
Simple Moving Average--A simple moving average is formed by finding the average (mean) price of a stock or index over a specified number of periods. A period can be a day, a week, 5 minutes, etc. For example: a 15-day simple moving average is calculated by adding the closing prices for the last 15 days and dividing the total by 15. A 30 minute moving average, which might be used by our Day Trading Systems is calculated by adding the closing prices for the last 30 one-minue time periods and dividing by 30.
Exponential Moving Average--In order to reduce the delay associated with simple moving averages, technical analysts will often use exponential moving averages (also called exponentially weighted moving averages, or EMAs). EMAs reduce the delay by applying more weight (importance) to recent prices relative to older prices. In other words, an exponential moving average will react quicker to recent price changes than a simple moving average.
Most Swing Traders prefer Exponential Moving Averages to Simple Moving Averages, but both are often used as parts of our various trading strategies.
Syndicate Site
