Forex Trading Moving Averages
Forex Trading Moving Averages is a technical analysis indicator that lets you see the average value of a currency over a period of time. In order to calculate moving averages for the past 20 days you add the last 20 currency prices and divide the addition by 20. Because days continue to advance, the sum you'll get through Forex trading will change on a daily basis, and this is why it is called moving averages.
The most commonly used Forex trading moving averages timeframes are 20, 30, 50, 100 and 200 days. Each timeframe can give you a different view and perspective on the future of the currency, and this is why all of these figures are used periodically. Using these different timeframes you can increase your profits and also protect you lots from unnecessary losses, so use it wisely, and frequently.
If the Forex trading timeframe is shorter, price changes will affect it more. If the timeframe is longer, the moving average will be smoother and less sporadic. Moving averages are used in order to recognize a certain trend the Forex trading currency is following, and also to view a clearer and straighter graph, without any added "noise".
Forex trading moving averages are the most popular indicator to be used for various Forex trading strategies and technical analysis.
Tania Raven, Market Analyst