Summary: Using Moving Averages

There are many types of moving averages.

The two most common types are a simple moving average and an exponential
moving average.

Simple moving averages are the simplest form of moving averages, but they are
susceptible to spikes.

Exponential moving averages put more weight on recent prices, which means they
place more emphasis on what traders are doing now.

It is much more important to know what traders are doing now than to see what they
did last week or last month.
Simple moving averages are smoother than exponential moving averages.

Longer period moving averages are smoother than shorter period moving averages.

Using the exponential moving average can help you spot a trend faster, but is prone
to many fake outs.
Simple moving averages are slower to respond to price action but will save you from
spikes and fake outs.

However, because of their slow reaction, they can delay you from taking a trade and
may cause you to miss some good opportunities.

You can use moving averages to help you define the trend, when to enter, and when
the trend is coming to an end.

Moving averages can be used as dynamic support and resistance levels.

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One of the best ways to use moving averages is to plot different types so that you can
see both long-term movement and short-term movement.

You got all of that? Why don’t you open up your charting software and try popping up
some moving averages?
Remember, using moving averages is simple. The hard part is determining which one
to use!

That’s why you should try them out and figure out which best fits your style of
trading. Maybe you prefer a trend-following system. Or maybe you want to use them
as dynamic support and resistance.

Whatever you choose to do, make sure you read up and do some testing to see how it
fits into your overall trading plan.