Moving Average (SMA)

 Moving averages can be calculated foranytime frame, from minutes, hours to years.
 Moving averagesare also calculated using other parameters such as high, loe & open. However
the closing prices are used mostly by the traders and investors.
 SMA essentially gives each data point equal importance.
 It simply takes the sum of all the past closing prices over the time periods, divides the result by
the number of price used in the calculation. For example, a 10-day SMA is just the sum of the
closing prices for the past 10 days, divided by 10.
 Increasing the number of time periods in the calculation is one of the best ways to gauge the
strength of the long-term trend and the likelihood that it will reverse.

The Exponential Moving Average

 The reason why EMA is quicker to react to the current market price is because EMA gives more
importance to the most recent data points.
 This helps the trader to take quicker trading decisions. Hence for this reason, traders prefer the
use of the EMA over the SMA
 The problem with EMA is that it gives you many trading signals (buy and sell) during a sideways
market.

Exponential Moving Average Crossover

 A moving average crossover system is an improvisation over the plain vanilla moving average
system. It helps the trader to take fewer trades in a sideways market.
 In a EMA crossover system, instead of the usual single EMA , the trader combines two moving
averages the shorter moving average is also referred to as the faster moving average. The longer
moving average is reffered to as the slower moving average.

MACD
 The MACD indicator  is a collection of three time series
1. the MACD series proper
2. the "signal" or "average" series
3. the "divergence" series which is the difference between the two.

The MACD series is the difference between a "fast" (short period) exponential moving average (EMA),
and a "slow" (longer period) EMA of the price series. The average series is an EMA of the MACD series
itself.
Moving Average Convergence/ Divergence Oscillator (MACD)
 Developed by Gerald Appel in the late seventies,
 The MACD turns two trend-following indicators, moving averages, into a momentum oscillator
by subtracting the longer moving average from the shorter moving average.
 As a result, the MACD offers the best of both worlds: trend following and momentum.
 The MACD fluctuates above and below the zero line as the moving averages converge, cross and
diverge.
 Traders can look for signal line crossovers, centerline crossovers and divergences to generate
signals.
 Because the MACD is unbounded, it is not particularly useful for identifying overbought and
oversold levels.