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FOREX TRADING COURSE FOR BEGINNERS
A moving average is an average of a number of consecutive prices updated as new prices become
available. The moving average swallows temporary price aberrations but tells you when prices
begin moving consistently in one direction.
Trading with moving averages will never position you in the market at precisely the right time.
They are intended to help you take profits from the middle of the trend and hold losses to a
minimum.
The risks and the magnitude are intrinsic to the speed of the moving averages. Professional
traders lean toward the faster averages and portfolio managers generally prefer slower signaling
moving average approaches.
Moving averages are a simple way to gauge the direction the tide is flowing in a commodity
market. They are not always right, but they provide a wide variety of possible uses.
LAG PRICES
Moving averages lag prices because of their makeup. You can make a moving average for any
number of days you choose, but remember that the more days you average, the more sluggish
the moving average becomes. Most commodity traders find a 3-day moving average alone is too
volatile. However, 4-day and 5-day moving averages are common as short-term indicators.
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