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Moving Average Stock Trading Strategies



About the Moving Average Stock Trading Strategy

Stock Moving average is one of the most widely used Stock Indicator because it is simple and easy to use.


This Stock Indicator is a stock trend following indicator that is used by Stock traders for three things:


  • Identify the beginning of a new stock market trend

  • Measure the sustainability of the new stock trend

  • Identify the end of a stock trend and signal a reversal stock trading signal


The Stock Moving Average or Stock MA is used to smooth out the volatility of stocks price action. The MA is an overlay stocks technical indicator and it is placed on top or superimposed on the stocks price chart.


On the example stock chart below the blue line represents a 15 period MA, which acts to smooth out the volatility of the stocks price action.

MT4 Stock Technical Chart Indicators

Stock Moving Average Technical Stocks Indicator - MT4 Stock Technical Chart Indicators



Calculation of the Moving Average

The Stock Moving Average is also known as MA - is calculated as an average of stocks price using the most recent stocks price data.


If the MA uses the 10 period to calculate the average of the stocks price then it is referred to as a 10 period stock trading moving average, because most stock traders use the day as the standard stocks price period we shall just refer to it as the 10 day MA.


To calculate the ten day MA the stocks price of the last 10 days is averaged, the stock trading moving average indicator is then updated constantly after every new stocks price period. So after every new stocks price period is formed the moving average is then calculated afresh using the most recent 10 stocks price periods, that is why it is called a moving average because the average is constantly moving when stocks price data is updated.

 

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