The Moving Average Technical Indicator shows the mean price value of the instrument for a specific period of time. When the moving average is calculated, the price of the instrument for this period is averaged. As prices change, the average is either up or down.
There are four different types of moveable averages: simple, exponential, smooth and linear weighted. (also called arithmetic). For all sequential data, moving averages including price opening and closing, highest and lowest prices, trade volume or any other indicator can be calculated. This is often the case when averages are double moving.
The only thing that differs significantly between averages of different types is that weight coefficients, which are assigned to the latest data, differ. If we speak of a simple moveable average, all prices of the time period in question are of the same value. Exponential and linear moving averages give the latest prices a greater value.
The most common way of interpreting the average price move is to compare its dynamics with price action. When the instrument price is higher than its average, a purchase signal appears, if the price is below its moving average, then it is a selling signal that we have.
This trade system, based on the moving average, is not designed to enter the market at its lowest point and its exit at its highest point. It allows for the following trend: purchase shortly after prices have reached the lowest level and sell soon after the prices have reached their peaks.
Moving averages for indicators can also be used. Here, the interpretation of the moving average indicator is similar to that of the average price movements: when the indicator rises above its average movement, this means the upward movement of the indicator can continue: if it falls below its moving average, it is likely to continue downwards.
The types of moving averages on the chart are as follows:
Simple Average Moving (SMA)
Average exponential movement (EMA)
Average smooth movement (SMMA)
Linear Moving Average Weighted (LWMA)
Simple Average Moving (SMA)
In other words, the simple average arithmetical movement is calculated by summarizing the price of instrument closure over a number of single periods (for instance, 12 hours). This value is then divided according to the number of such periods.
SMA = SUM(N), N / N SUM(N).
N – is the number of periods of calculation.
Average exponential movement (EMA)
The exponentially smooth move average is calculated by adding to the previous value a moving average of a certain share of the current closing price. With moving averages exponentially smooth, the latest prices have more value. The exponential average moving P-percent will look like:
EMA =(CLOSE(i)*P)+(EMA(i - 1)*(100 -P)) >(CLOSE(i) *P)
CLOSE(i) – the closure price of the current period;
EMA(i-1) – Average exponentially moving closing period;
P – the percentage of the value of the price.
Average smooth movement (SMMA)
The first value is calculated by the simple moving average (SMA) of this smooth moving average:
Sum1 = Sum Sum (CLOSE, N)
MSMA1 = MSS1/N
The second and subsequent moveable averages are calculated using this formula:
SMMA(i - 1) * N N = SMMA(i-2) N
SMMA(i) = (SMMA(i - 1) + CLOSE(i)) / N SMMA(i)
SUM1 – is the total sum of N-period closing prices;
PREVSUM – the previous bar's smooth sum;
SMMA1 – the smooth moving first bar average;
SMMA(i) – is the current bar's smooth moving average (excluding the first);
The current closing price is CLOSE(i);
N – the period of smoothing.
By arithmetic manipulation, the formula can be simplified:
ART I = (ART(i - 1) * (N - 1) + ART I
Linear Moving Average Weighted (LWMA)
The latest data is worth more than early data in the case of weighted moving average. By multiplying the closing prices in each series by a certain weight coefficient, the weighted moving average is calculated.
Close(i)*i, N) / SUM SUM (i, N)
SUM(i, N) – is the total number of coefficients in weight.
Moving Average Forex Trading Strategies
A forex trader can develop a simple trade strategy to use only a few moving averages (MAs) or associated indicators to take advantage of trading opportunities. MAs are mainly used as trend indicators, and support and resistance levels can also be identified. The two most common MAs are the simple moveable average (SMA), which represents the average price over a certain period of time, and the exponential moveable average (EMA), which gives more weight to recent prices. These two build the fundamental structure of the Forex trading strategies below.
Moving averages in forex trading are frequently used, particularly over 10, 50, 100 or 200 day periods.
The following strategies are not confined to a certain timeframe and can be used for both day trading and long-term strategies.
Moving average trade indicators can be used alone, or as envelopes, ribbons, or strategies of convergence.
Moveable averages are recessive indicators, which means that they do not predict where the price is going.
Moving averages and related strategies are more likely to work in highly trendy markets.
Average Trading Strategy Moving
The EMA uses this changing average trading strategy, as this type of average is designed to respond quickly to changes in prices. The strategic steps are here.
Plot three exponential moving averages — five-year EMA, twenty-year EMA, and 50-year EMA — in a 15-minute chart.
Purchase if the 5-period EMA crosses the 20-period EMA from below, and the 5/20 EMAs are above 50 EMAs.
For sales trading, sell if the 5-period EMA crosses the 20-period EMA, and both EMA and the cost are less than 50-period EMA.
Place the initial order for a stop-loss below the 20-period EMA (for a purchase trade) or about 10 pips on the entry price.
An optional step is to bring down the stop-loss even if the trade is profitable for 10 pipes.
Consider setting a profit target of 20 pipes or otherwise exiting if the five-period falls short if the 20-period is long, or if the five move shortly over the 20-period.
Forex traders often use a long-term MA crossover as the basis for a commercial strategy. Play with various MA longitudes or time frames to see what works best for you.
Trading strategy for moving average envelopes
Moving average envelopes are above and below a moving average percentage envelopes. No matter what kind of moving average the envelopes are based on, forex traders can use either a simple, exponential or weighted MA.
Forex traders should test different percentages, time intervals and currency pairs to understand how best an envelope strategy can be used. It is best to see envelopes over 10 to 100 days and use "bands" that are between 1-10 percent of the rotational average for daily charts.
When the day is traded, the envelopes are often less than 1%. In the following one-minute chart, the MA length is 20 and the envelopes 0.05%. Depending on the volatility, settings, in particular the percentage, may need to be changed daily. Use settings which align the strategy with the price of the day below.
Ideally, trade only when the overall price bias is strong. Then most traders trade only in this direction. If the price is up, consider purchasing once the price is approaching the middle band (MA) and starts to pick it up. In a strong downward trend, when price approaches the middle band and then starts to fall away.
Once a short pitch is taken, place a stop-loss pipeline above the recently formed swing high. Once a long trade has taken place, place a halt pip underneath the swing low that has just formed. Take into account exit when the lower band reaches a short trade price or the upper band for a long trade. Set a target that is at least twice the risk. For example, set a target of 10 pipes away from the entry if there are five pipes at risk.
Moving average trade strategy for ribbons
The moving average strip can be used to develop a core Forex Trading Strategy based on a slow trend change transition. It can be used in either direction with a trend change (up or down).
The creation of the moving average ribbon was based on the conviction that the plotting of moving averages in a chart is better. The band consists of eight to 15 exponential moving averages (EMAs), which vary from very short to long term averages, all of which are shown on the same chart. The resulting average ribbon is intended to indicate the direction of the trend and its strength. A strong trend is indicated by a steeper angle of motion – and a greater distance between them, causing the ribbon to fan out or wide out.
Traditional buying or selling signals are the same type of crossover signals used with other average movements. There are numerous crossovers, so a trader must choose how many crossovers represent a good trade signal.
An alternative strategy can be used to offer high-profit potential to low-risk businesses. The strategy outlined below is designed to achieve a crucial market breakthrough in either direction, which often happens after a market has traded over a long period in a tight and tight range.
Consider the following steps to use this strategy:
Check for a period during which all (or most) moving averages converge closely, when prices flat out sideways. Ideally, the different moving averages are so close that they form almost one thick line that there is very little separation between the various moving averages.
Stick the narrow trading range over the high range with a buy order and a sales order under the low range. If the purchase orders are triggered, place an initial order under the low trading range; if the order is triggered, stop just below the high range.
Average moving Conversion Trading Divergence Strategy
The moving average convergence divergence (MACD) histogram shows the difference between a 26-period EMA and an EMA 12-period two exponential moving averages (EMA). In addition, a nine-period EMA is presented as a histogram overlay. In relation to the zero line, the histogram shows positive or negative readings. While used as a momentum indicator in forex trading most frequently, the MACD can be used to indicate market direction and trend.
Various forex trading strategies can be developed with the MACD indicator. Here's a case in point.
Trade the crossover of the MACD and signal lines. When the price is higher (MACD should be above the zero line), buy when the MACD crosses the signal line from below. A short sell when the MACD is crossing the signal line in a downtrend (MACD should be below zero line).
If long, exit when the MACD falls underneath the signal line.
If it is short, exit when the MACD rallies over the signal line.
At the beginning of the trade, place an interruption just below the latest swing, if long. Place a stop-loss, when short, just above the latest swing.
Multiple moving average Guppy
The multi-moving average Guppy (GMMA) has two separate sets of exponential moving averages (EMAs). The first set contains EMAs for the previous three, five, eight, ten, twelve and fifteen trade days. Daryl Guppy, Australia's trader and GMMA inventor, thought this first set highlights short-term traders' feelings and direction. For the previous 30, 35, 40, 45, 50 and 60 days a second set consists of EMAs; if adjustments must be made to compensate for the nature of a particular currency pair it is the long term EMAs that are changed. This second set should show the long-term activity of investors. 1
If there appears to be no support in the short-term trend from the long-term averages, this may be a sign that the long-term trend is draining. For a visual image, see the ribbon strategy above. With the Guppy system, you can make short moving averages all in one color and all moving averages are different. See the two crossover sets like the Ribbon. When the shorter mean crosses.
The moving average is seen as an indicator of delay. The price direction is not predicted, but rather the current trend with a delay.
The moving average indicator filters noise out with fluctuations in prices and volumes that can confuse interpretation, making it easier to see the trend underlying it. It appears as a diagram close to price and shows the average value of the price of a security over a specified period. For instance, the closing prices of the last 21 days are added to calculate a 21-day moving average and the sum is divided by 21.
With each new trading day, we perform the same calculation. Only the prices of the last 21 days in the calculation are used each time. It is therefore known as a moving average.
The example we just explained refers to the simple average movement (SMA). There are other types of average movements, such as exponential and weighted movements.
How can I calculate?
The problem with the simple moveable average is that only the average period is taken into account and the same weight is given every day. In an average 21 days, the 1st day is equal to the 21st day. This is the main criticism of the simple moveable average, and some believe that the more recent price action should be given greater weight. The weighted moving average (WMA) may be used to overcome this problem. The weighted moving average gives new prices more weight and older prices less weight.
For example, we should take the close price of the 5th day to calculate a 5-day WMA and multiply it with 5, the 4th day with 4, the 3rd day with 3, the 2nd day by 2 and the 1st day by 1. Once the total is determined, we divide the number by adding the multipliers. If you add the 5 day WMA example multipliers, the number is 15.
The weighted moving average takes into account, however, the prices covered by the moving average period and not all safety data. The exponential moving average (EMA) can be used to solve this problem.
This moving average gives more weight to recent prices and also includes all prices in the security history. The advantage is that the exponential moving average is more sensitive and approaches price measures while taking into consideration its calculation of all data in the safety life.
Looking at the graph, we can see how the EMA reacts faster than the slowest SMA to a change in trend.
How to trade with the average movement?
The moving average is usually shown in the same diagram as price. Thus, the penetration of the moving average can indicate a change in the direction of the trend.
For example, when a price breaks below the moving average and a selling signal results from a price break below the moving average, a buy signal is generated. Confirmation is added when the moving average line turns toward the price trend.
We can use moving averages to identify opportunities for buying and selling. Various techniques are used. One is a simple technique with only one average moving. More than one moving average is used in other techniques. Two moving averages for the double crossover method, and three moving averages for the triple crossover method. The advantage of more than one moving average is the production of fewer whipsaws.
You can see in the chart below that prices are in a downward trend. The best trade opportunity would be if prices are also below the moving average as a strong downward trend would be confirmed. We would sell when the price is up or down from top to bottom of the shifting average.
Note that the longer the time you spend on SMA, the slower the price movement will react. The result would be less whipsaws and false signals. In order to make a moving average smoother, the average closing price would be longer. A shorter time span that moves average prices closer and is more sensitive to price action.
Long-term averages work better as long as the trend continues. Therefore more than one moving average can be more advantageous.
Displaying two or three moving averages in one diagram provides important signals based on the moving average trends.
The technique of double crossover
We have two moving averages in the double crossover procedure, one short and one longer, for example SMA-50 and SMA-200. When the SMA-50 crosses the SMA-200 from below to move higher, a buy signal occurs. When the SMA-50 crosses under the SMA-200, a sell signal occurs.
The Triple Crossover
When a shorter average increases above a medium-term average and both increase above a long-term moving average, the best performance can be achieved. This is called the threefold intersection technique.
For example, the moving averages of 10-25-50 days can be used. Another commonly used triple crossover system is the average moving system for 4-9-18 days. The alignment of the moving averages is as follows in an upward trend: the shorter MA term (for example 10 days) closely follows prices, while the 25 days follow below and the 50 days are lower than these two.
In a downward trend, the order is reversed to the lowest 10 days MA and then the top 25 days, followed by the top 50 days. When prices are down and turn upside down, a purchase alert occurs when the shorter-term, moving average, crosses 10 days above 25 days and 50 days.
The buy signal is only confirmed after 25 days over 50 days. The order of the moving averages is therefore reversed. When the trend reverses to the bottom, a sale alert is issued when ten days are less than 25 days and then 50 days. A selling signal is confirmed when the 25 day is below 50 days.
Download Metatrader 5
Click this link to download the installation of the Metatrader 5 PC file. Run the file after you download it. Depending on the system security settings, a security window can be requested to confirm action. Click on the "Yes" button.
Read the license agreement
Read and accept the Metatrader 5 License Agreement carefully before installation
Click Next to start the installation. The Installation Wizard Metaquotes Data Network will download and install the files on your PC. Be patient in this step
Run it after installing the software. You will see the server list. Choose one server. Choose one server.
Login to your account
Please log in to your MT5 account with your account number and password. To do this, you can use Metatrader 5 on your PC.
To install the trading platform, download and run the mt5setup.exe installer.
This is an installer on the web. Most components are therefore downloaded from the Internet during installation.
The installer determines the bit features of the operating system and installs the appropriate version of the platform;
Microsoft Windows 2008/7/8/10 offers this platform. Also necessary is an SSE2 processor (Pentium 4/Athlon 64 or higher). Other hardware requirements depend on the platform conditions – MQL loading applications, active instruments numbers, charts, etc.
The platform can be installed in automated mode without further actions by the user. If the installer is operating on the /auto key, the user will not see installation settings and the terminal with the default Start Menu folder name is installed in the default path. E.g. C:\mt5setup.exe /car. For example:
Check the software description and the end-user license agreement. If you agree to all contract terms and conditions, click on the button "Next." Exit the installer unless you agree to the Agreement.
The distribution package background download from the server of a developer starts by clicking the "Next" button. A user-friendly server is chosen for download.
Click "Settings" to select the installation options
Installation folder — the directory the trading platform is installed in. You can enter a different directory, set the path manually or click the "Browse" button.
Program Group - the name of the program group created in the Start menu. The name of the program group.
Open MQL5.community — open on the most popular traders' community website after installation. MQL5.community offers a number of useful services, ranging from automated copy trading to buying and running on a virtual platform for ready-made commercial robots.
All previous platform settings are preserved, with the exception of default profiles and templates and the standard set of MQL5 programs.
To work with multiple accounts at the same time, install a number of platforms in different directories.
Click "Next" to start the installation. Click "Finish" and when finished, run the platform.
You can download the beta version of the terminal installation file with /beta key. Installing the release version first in normal mode and updating to a beta version. By skipping this step you can save time and traffic. Example of installation start:
To update an existing platform, browse Help — Check Desktop Updates — Last Beta Version.
The Forex Market Hours Indicator (MT4) of Metatrader 4 shows market currency hours in GMT time.
The indicator shows all market sessions in one usable and readable window: Sydney, Tokyo, Frankfurt, London and New York.
The most volatile sessions on the markets are London and New York and make them the best time for daytime and scalp business.
The indicator itself does not generate trading signals.
MT4 Market Hours Attributes Indicator:
Currency pairs: any majors recommended (EURUSD, GBPUSD, USDJPY, AUDUSD, EURJPY, GBPJPY etc.)
Platform Metatrader: 4
Type: market time, time display, chart pattern display
Modifications: colors, width & style.
How can your 4th trading platform - mq4 & ex4 files - install the Forex Market Hours Indicator?
• To download the indicator, click the "LINK" button at the bottom of this post.
• Metatrader 4 (MT4) platform folder: MQL4 > Indicators Copy the Forex Market Hours Indicator and paste it.
• You can access the folders in this way: File > Directory Open > MQL4 > Indicators (paste files here).
• Restart your Metatrader 4 Client.
• To test the indicator, select Chart and timeframe
• Check the "Custom Indicators" in your Navigator on the left side of the Metatrader 4 platform.
• Right-click gmt.ex4 on the market hours of the forex, then click on "Add to chart."
• If you like, you can change your settings and then click OK.
• The display is ready and on the chart.
In the downloadable archives the following Metatrader 4 files are included:
Forex market hours gmt.ex4
GMT MT4 Forex Hours Indicator is a useful and user-friendly MT4 indicator.
In particular, the indicator can draw the most important forex sessions. While many people do not think it is important to spend time trading first, it is actually the start to benefit any trader. And it comes when the audience is large enough to pave the way for a successful company.
There are two important reasons why a trader should monitor the main hours of foreign exchange trading attentively:
After a few hours of market opening in London, the most important time is when this opening determines how the remaining session will develop.
The overlap between New York and London markets increases liquidity as the world's leading financial centres.
How does this Forex session indicator work?
Traders usually use business meetings to determine the hours of volatility all day because business activities are different from bourses. The most volatile business meetings in London and New York, especially during the four-hour overlap, are considered. Strategies also exist that only open the session in London or allow trading in the Asian session. Sydney is the calmest or even the "flatest" session (Pacific). Strengthening or changing a trend is often the same as the open time of a certain session.
In summary, we can say that the session indicator alone generates no trading signals. However, like other information indicators, the Trading Sessions Indicator is an essential assistant in each arsenal of traders.
Simplified H1 timeframes and higher
After the indicator is installed, it may first appear, as numerous user queries confirm, that it does not work properly in or higher H1 scales.
However, it makes no sense to start with the H1 schedule to create sessions on the chart when trying to get to the end of the question. The session takes 9 hours, which is 9 bars on the chart and the size is not convenient for the market analysis.
How do I log on to my MT5 (MetaTrader5) trading platform?
Please go to "File" on the "Login to Trade Account" when downloading the trading platform.
Then you have to fill in your desired field.
When the MT5 trading account is opened, login credentials should already have been provided.
If the specified trading server of your Forex broker is not in the login window drop down list, you must add the server.
Please go to "File" for "Open Account" and enter in the following field the server name you're looking for.
Alternatively, various server names may be tested for the Forex broker because your trade account sometimes contains different server names than those assigned to you.
*Many novice traders make mistakes when they log into their accounts by mispelling.
You can also try to copy and paste if you have trouble logging in.