Free Trial

Safari Books Online is a digital library providing on-demand subscription access to thousands of learning resources.


  • Create BookmarkCreate Bookmark
  • Create Note or TagCreate Note or Tag
  • PrintPrint

Chapter 14. Moving Averages

Chapter Objectives

By the end of this chapter, you should

  • Be aware of how moving averages are used to identify trends

  • Be able to calculate a simple moving average

  • Be able to calculate an exponential moving average

  • Be familiar with the concept of directional movement

  • Be familiar with the construction of envelopes, bands, and price channels

One of the most successful methods of identifying and profiting from trends is the use of moving averages. A moving average is a constant period average, usually of prices, that is calculated for each successive chart period interval. The result, when plotted on a price chart, shows a smooth line representing the successive, average prices. Moving averages dampen the effects of short-term oscillations. Many of the most successful technical investment managers use moving averages to determine when trends are changing direction. Moving averages are especially useful in markets that have a tendency to trend.


  

You are currently reading a PREVIEW of this book.

                                                                                                                    

Get instant access to over $1 million worth of books and videos.

  

Start a Free 10-Day Trial


  
  • Safari Books Online
  • Create BookmarkCreate Bookmark
  • Create Note or TagCreate Note or Tag
  • PrintPrint