移动平均法（Moving Average） Moving Average (MA) is a widely used investment technique used to analyze stock price trends by smoothing out the irregularities that may be presented in the data. This technique involves taking average of a selected set of prices, over a specified number of time periods. MA is a trend-following or lagging indicator, as it is based on past prices. The two types of moving averages are simple moving average (SMA) and exponential moving average (EMA).
Simple Moving Average
Simple Moving Average (SMA) is the most basic form of moving average. It is calculated by taking the average of a certain number of price periods, which are added together and divided by the total number of periods. For example, in a 10-day moving average (MA10), the last 10 price periods are added together, divided by 10 to get the average. A 20-day moving average will do the same calculation for the last 20 days. This average is then plotted on a chart over time to serve as a visualization to help make trading decisions.
Exponential Moving Average
Exponential Moving Average (EMA) is similar to the Simple Moving Average (SMA), but it gives a higher degree of weight to the latest data points. This calculation is done by applying a special weighting property to the EMA’s formula that assigns more value to the most recent price points, while still keeping track of the older ones. The primary difference between EMA and SMA is that EMA places more emphasis on recent price data, while SMA is a simple average of price data point over a given period.
Benefits
The primary benefit of using Moving Averages is to identify the direction of a trend. By recognizing the direction of a trend, investors can then decide how to act upon it. Another advantage of using Moving Averages is that the data can be smoothed out. This eliminates some of the noise that is sometimes presented in the short-term movements. In addition, MA is also used for identifying support and resistance levels.
Using Moving Average
Investors use two common strategies when trading with Moving Averages. The first one is called the Crossover Strategy. This strategy identifies a potential trading opportunity when a MA(long) crosses over another MA(short). When the long MA crosses above the short one, it signals the start of an uptrend, while when the long MA crosses below the short MA, it signals the start of a downtrend. The second strategy is called the Trend Trading Strategy. This strategy is used to trade within an established trend. This is done by buying/selling when the price moves close to the MA.
Conclusion
Moving Average is a widely used investment technique that helps analyze stock price trends by smoothing out the data points. Moving Average is calculated by taking the average of a specific set of prices, over a period of time. The two main types of Moving Averages are the Simple Moving Average (SMA) and the Exponential Moving Average (EMA). Moving Averages help identify the direction of a trend and also helps identify support and resistance levels. Additionally, there are two common trading strategies that can be used when trading with MAs - the Crossover Strategy, and the Trend Trading Strategy.
