
Moving Averages: Conclusion
By Casey Murphy, Senior Analyst ChartAdvisor.com
In this tutorial, we've covered the basics of moving averages. Here's a brief recap:
 Few technical indicators are as popular and widely followed as the moving average.
 Moving averages come in various forms, but their underlying purpose remains the same: to help technical traders track the trend of financial assets by smoothing out the daytoday price fluctuations, or noise.
 The simplest form of a moving average is appropriately known as a simple moving average (SMA). It is calculated by taking the arithmetic mean of a given set of values.
 The exponential moving average (EMA) assigns a weighting to recent data because many traders regard this as the major downfall of the SMA.
 Some of the primary roles of a moving average include identifying trends and reversals, measuring the strength of an asset's momentum and determining potential areas where an asset will find support or resistance.
 A moving average can be a great risk management tool because of its ability to identify strategic areas to stop losses.
 Using moving averages can be very ineffective during periods where the asset is trending sideways.
 There are many different strategies involving moving averages. The most popular is the moving average crossover.
 Moving averages are used in the creation of a number of other very popular technical indicators such as the moving average convergence divergence (MACD) or Bollinger BandsÂ®.
 Moving averages won't solve all your investing problems. However, when used judiciously, they can be valuable tools in planning your trading strategy.

RELATED TERMS

Simple Moving Average  SMA
A simple, or arithmetic, moving average that is calculated by ... 
Exponential Moving Average  EMA
A type of moving average that is similar to a simple moving average, ... 
Moving Average Ribbon
A technique used in technical analysis to identify changing trends. ... 
Death Cross
A crossover resulting from a security's longterm moving average ... 
Golden Cross
A crossover involving a security's shortterm moving average ... 
Displaced Moving Average
A moving average that has been adjusted forward or back in time ...
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