This is the staring article for crypto currency trading and technical analysis for crypto trading. There are lots of technical analysis methods in the crypto market as in the forex market as well. Thousands of people use the technical indicators which help to identify the point of start trading and also end trading.
Moving average is a most basic and the common and most popular technical indicator that helps most of the complex indicators to function in real time. Meaning, moving average is become the basement for lots of highly accurate and profitable indicators. So as a start we decided to describe the moving average (MA) as it is much required to understand the basics of the technical analysis in trading. So let’s begin.
What is Moving Average?
Simply, It’s a price indicator which the most recent price variation indicate and create a smooth line against time. The term call simple moving average (SMA), that is because the most fundamental way of technical analysis gives by this.
In contrast, the graph is making by the basic average of the past prices. Well we describe in with statistics. Moving average is a calculation method used to analyze by creating a series of averages of different subsets of the full data set. So for example, the time period selected as the sub set for the moving average of whole time period. So it will be 7 days , 14 days, 21 days like wise. But if we consider the moving average of several different sets, here is a lagging difference. As the 21 days moving average is showing more lagging result than the 7 days moving average. Please check the following example from trading view.
The graph shows BTC/USDT pair, MA, 7 Days (red), 14 Days (Blue) , 21 Days (Yellow)
So it is clear the 21 days MA will give marginally smooth and lagging result than the 7 days MA. So 7 days MA changing rapidly and have much more fluctuations than the 21 Days MA. So for quick and short length analysis 7 days give high results and long term movement will shows by the 21 days MA.
But consider, this the MA is just a fundamental analysis, that cannot predict the market futures along. And there are much improved mathematical analysis methods available that have advanced with the basics of SMA. So in next paper will see the Exponential Moving Average (EMA). And also we are planning to move until a complete strategy build for profitable trading.
Lets see from next article – Exponential Moving Average
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By team News I can