About Moving Average Stock Indices Trading Strategy - Trade Strategy Example
Stock Index Moving average is one of the most widely used Stock Indices Trading Indicator because it's simple and easy to use.
This Stock Indices Indicator is a trend following indicator that's used by traders for three things:
- Identify the beginning of a new Stock Index market trend
- Measure the sustainability of the new Stock Index trend
- Identify the end of a Stock Indices trend and signal a reversal Stock Indices trading signal
The Stock Indices Moving Average or Indices MA is used to smooth out the volatility of Stock Index price action. The MA is an overlay Stock Index technical indicator & it's placed on top or superimposed on the Stock Indices price chart.
On the example Stock Indices trading chart below the blue line represents a 15 period MA, which acts to smooth out the volatility of the price action.
Stock Index Moving Average Technical Indicator - MT4 Trading Chart Indicators
Calculation of the Moving Average
The Stock Indices Moving Average is also known as MA - is calculated as an average of Stock Index price using the most recent price data.
If the MA uses the 10 period to calculate the average of the Stock Indices price then it's referred to as a 10 period Stock Indices moving average, because most Stock Traders use the day as the standard price period we shall just refer to it as the 10 day MA.
To calculate the ten day MA the price of the last 10 days is averaged, Stock Indices moving average indicator is then updated constantly after every new Stock Index price period. So after every new Stock Index price period is formed the moving average is then calculated afresh using the most recent 10 Index price periods, that's why it is called a moving average because the average is constantly moving when Stock Indices price data is updated.
