Module 4: Technical Analysis

Moving Averages

5 min read

Moving averages smooth price to show the underlying trend.

SMA and EMA

A simple moving average (SMA) weights all periods equally. An exponential moving average (EMA) weights recent prices more and reacts faster. Common periods include 20, 50 and 200.

Limitations

Moving averages lag price. In sideways markets they give many false crossover signals.

Key takeaways

MAs reveal trend direction.
EMAs react faster than SMAs.
They lag and whipsaw in ranges.

Educational content only, not financial advice. Trading forex and CFDs involves significant risk of loss.