Moving Averages indicator(s) - cTrader

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A Moving Average (MA) is a widely used indicator in Technical Analysis that helps smooth out price action by filtering out the “noise” from random price fluctuations. Moving averages (MA) lag because they are based on past prices. Despite this lag, moving averages help smooth Price Action and filter out the noise.


Simple Moving Average (SMA)

The simple moving average (SMA) is an Average of the last n Prices, where n is the number of periods you want the Average of.

(P1 + P2 + P3 + P4 + ... + Pn) / n

A four-period SMA with prices of 1.2640, 1.2641, 1.2642, and 1.2641 gives a moving average of 1.2641 using the calculation [(1.2640 + 1.2641 + 1.2642 + 1.2641) / 4 = 1.2641]

While knowing how to calculate a simple average is a good skill to have, trading and chart platforms calculate all this for us. Simply select the SMA indicator from the list of charting indicators, apply it to the chart, and adjusting the number of periods used. Adjustments to the indicators are made in the "Settings". On many platforms, the settings are accessed by double-clicking on the indicator.

The advantage of an SMA is that you know exactly what you are getting. The SMA value is the average price for the number of periods in the SMA calculation.
Common SMA values are 8, 20, 50, 100 and 200. For example, if using a 100-period SMA, the current value of the SMA on the chart is the average price over the last 100 periods (price bars).


Exponential Moving Average (EMA)

The EMA is a weighted average of the last n prices, where the weighting decreases exponentially with each previous price/period.

In other words, recent prices are given more weight than past prices.

[Close - previous EMA] x (2 / n+1) + previous EMA

A four-period EMA with prices of 1.5554, 1.5555, 1.5558, and 1.5560, with the last value being the most recent, gives a current EMA value of 1.5558 using the calculation [(1.5560 - 1.5558) x (2/5) + 1.5558 = 1.55588]

As with the SMA, charting platforms do all the EMA calculations for us. Select the EMA from the indicator list on a charting platform and apply it to the chart. Go into the settings and adjust how many periods the indicator should calculate, for example, 15, 50 or 100-periods.

The EMA adapts quicker to price changes than the SMA. For example, when price reverses direction, the EMA will reverse direction quicker than the SMA. This is because the EMA applies more weight to recent prices, and less weight to prices that occurred in the past.


Weighted Moving Average (WMA)

The WMA is a weighted average of the last n prices, where the weighting decreases with each previous price. This is a similar concept to the EMA, but the calculation for the WMA is different.

(Price X weighting factor) + (Price previous period X weighting factor-1)...

WMAs can have different weights assigned based on number periods used in the calculation.

If there are four prices you want a weighted moving average of, then the most recent weighting could be 4/10, the period before could have a weight of 3/10, the period prior to that could have a weighting of 2/10, and so on. 10 is a randomly picked number, and a weight of 4/10 means the most recent price will account for 40% of the value of the WMA. The price three periods ago only accounts of 10% of the WMA value.

Assume prices of 90, 89, 88, 89, with the most recent price first:
((90 x (4/10)) + (89 x (3/10)) + (88 x (2/10)) + (89 x (1/10)) = 36 + 26.7 + 17.6 + 8.9 = 89.2

The weighted moving average is more customizable than the SMA and EMA. The most recent price points are usually given more weight, but it could also work the other way, where historical prices are given more weight.



Moving Averages (MA) can be used for both Analysis and Trading signals.

The length of the Moving Average (MA) depends on the Analytical objectives. Short moving averages (5-20 periods) are best suited for short-term trends and trading. Chartists interested in medium-term trends would opt for longer moving averages that might extend 20-60 periods. Long-term investors will prefer Mmoving Averages (MA) with 100 or more periods.

Some Moving Average (MA) lengths are more popular than others. The 200-day moving average is perhaps the most popular. Because of its length, this is clearly a long-term moving average. Next, the 50-day moving average is quite popular for the medium-term trend. Many chartists use the 50-day and 200-day moving averages together. Short-term, a 10-day moving average was quite popular in the past because it was easy to calculate. One simply added the numbers and moved the decimal point.

For analysis, All the Moving Averages (MA) help highlight the trend. When the price is above its MA it shows that the price is trading higher than it has, on average, over the period being analyzed. That helps confirm an Uptrend. When the price is below its MA it shows that the price is trading lower than it has, on average, over the period being analyzed. That helps confirm a Downtrend.

Moving Averages (MA) lag current Price Action (PA) because they are based on past prices; the longer the time period for the moving average, the greater the lag. Thus, a 200-day MA will have a much greater degree of lag than a 20-day MA because it contains prices for the past 200 days. The length of the moving average to use depends on the trading objectives, with shorter moving averages used for short-term trading and longer-term moving averages more suited for long-term investors. The 50-day and 200-day MAs are widely followed by investors and traders, with breaks above and below this Moving Average (MA) considered to be important trading signals.

Moving averages also impart important trading signals on their own, or when Two Averages cross over.
A rising Moving Average (MA) indicates that the security is in an Uptrend, while a declining moving average indicates that it is in a Downtrend.

Similarly, Upward momentum is confirmed with a Bullish crossover, which occurs when a short-term moving average crosses above a longer-term moving average. Downward momentum is confirmed with a Bearish crossover, which occurs when a short-term moving average crosses below a longer-term moving average.
These users thanked the author Tsar for the post:
Jimmy
Always looking the GREAT, never left GOOD Point...


Re: Moving Averages indicator(s) - cTrader

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2 x Moving Averages together


This Indicator produces 2 x Moving Averages together on the chart, of which you can edit the settings as follows.


Parameter :

MA Period 0 -- period for the 1st MA
MA Period 1 -- period for the 2nd MA

MA Method -- type for method
1. EMA
2. SMMA
3. LWMA
0. SMA (as default)

MA Shift -- value for shift

Applied Price --
ie SET Applied price to Close or Median using Zero, 1 , 2, 3 or 4
Price = 0 - Close
Price = 1 - Open
Price = 2 - High
Price = 3 - Low
Price = 4 - Median Price = (High+Low)/2
These users thanked the author Tsar for the post:
moey_dw
Always looking the GREAT, never left GOOD Point...

Re: Moving Averages indicator(s) - cTrader

4
3 x Moving Averages together


This Indicator produces 3 x Moving Averages together on the chart, of which you can edit the settings as follows.


Parameter :

MA Period 0 -- period for the 1st MA
MA Period 1 -- period for the 2nd MA
MA Period 2 -- period for the 3rd MA

MA Method -- type for method
1. EMA
2. SMMA
3. LWMA
0. SMA (as default)

MA Shift -- value for shift

Applied Price --
ie SET Applied price to Close or Median using Zero, 1 , 2, 3 or 4
Price = 0 - Close
Price = 1 - Open
Price = 2 - High
Price = 3 - Low
Price = 4 - Median Price = (High+Low)/2
Always looking the GREAT, never left GOOD Point...

Re: Moving Averages indicator(s) - cTrader

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Third Generation MA


The 3rd Generation Moving Average is an Advanced version of the standard Moving Average (MA) indicator.

It implements a rather simple lag-reducing procedure based on the longer MA period.
The method was first described by M. Duerschner (2011) in his article Gleitende Durchschnitte 3.0 (in German)
The presented version uses λ = 2, which provides the best possible lag-reducing. Higher λ increases similarity with the classic Moving Average.


Parameter :

MA_Period (default = 50) — a period of the 3rd Generation Moving Average (MA)
MA_Sampling_Period (default = 220) — a sampling period of the 3rd Generation Moving Average.
Should be at least 4 times greater than MA_Period.
MA_Method (default = MODE_EMA) — method of the Moving Average.

You can use the 3rd Generation Moving Average (MA) indicator the same as the Standard Moving Average — to detect the Current trend direction.
Always looking the GREAT, never left GOOD Point...




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