Forex Trading Floors "How to Trade"


Forex Trading Floors-How to Trade-Moving Averages

This week on Forex Trading Floors How to trade blog we will be covering moving averages.

Moving Averages

A moving average is simply a way to smooth out price action over time. By "moving average", we mean that you are taking the average closing price of a currency pair for the last 'X' number of periods. On a chart, it would look like this:


Like every indicator, a moving average indicator is used to help us forecast future prices. By looking at the slope of the moving average, you can better determine the potential direction of market prices.

As we said, moving averages smooth out price action.

There are different types of moving averages and each of them has their own level of "smoothness".

Generally, the smoother the moving average, the slower it is to react to the price movement.

The choppier the moving average, the quicker it is to react to the price movement. To make a moving average smoother, you should get the average closing prices over a longer time period.

There are two major types of moving averages:

Next week Forex Trading Floors How to Trade will be covering the two major types of moving averages-Simple and Expotential.

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