Indicator Moving average
The moving average on forex is very popular among indicators. It plays an important role in the system of many forex trader strategies.
The main task of the moving average indicator is to determine the direction of the trend line. Based on these indications, the trader determines whether to open a purchase or sale transaction. The forex indicator does not determine the price, but only indicates a possible trend as soon as the market sends the corresponding signals.
The system uses the smoothing method to provide a more convenient graphical analysis of the forex market. However, a simple moving average may linger relative to market activity.
The indicator "moving average" can move by closing prices, or by averages during the period.
Exponentially weighted moving average takes into account the entire volume of prices. It is therefore particularly popular among forex traders. If it moves up, you should open a purchase deal. If down, it 's a direct signal for sale.
Due to the fact that the moving average on the forex moves forward with changes in price, the presence of false signals may be excluded.
To avoid false signals, limiters are applied to the graph from above and from below. Crossing the top line is our signal to buy. Going beyond the lower limit tells us that there is a need to sell. Additional filters can be used to improve signal accuracy.
The moving average indicator does not work well with low volatility of Forex currency pairs and does not generate huge profits in a short time frame. However, it is excellent for stable earnings.