Basic Trading Indicators
1. Moving Average A moving average is a statistic that captures the average change in a data series over time There are 2 main types of moving averages that are commonly used: 1. Simple Moving Average (SMA) 2. Exponential Moving Average (EMA) 1.1 Moving Average The simple moving average is a lagging indicator because it's based on past price data. Combine SMA with other indicators and volume. To calculate a security’s 20-day SMA, the closing prices of the past 20 days would be added up, and then divided by 20. 1.2 Moving Average An exponential moving average (EMA) is a type of moving average (MA) that places a greater weight and significance on the most recent data points. The exponential moving average is also referred to as the exponentially weighted moving average. 1.3 Moving Average The EMA functions by producing buy and sells signals based on the crossovers and divergences it plots against the historical average. EMA defines prices trends and momentum. You can use ...