A moving average is a technical indicator that investors and traders use to determine the trend direction of securities. · It is calculated by adding up all the ...MovingAverageAtechnicalindicatorthatanalystsusetodeterminethedirectionofatrendandreducetheimpactofunexpectedpricespikesHome›Resources›Knowledge›Other›MovingAverageWhatisaMovingAverage?Amovingaverageisatechnicalindicatorthatmarketanalystsandinvestorsmayusetodeterminethedirectionofatrend.Itsumsupthedatapointsofafinancialsecurityoveraspecifictimeperiodanddividesthetotalbythenumberofdatapointstoarriveatanaverage.Itiscalleda“moving”averagebecauseitiscontinuallyrecalculatedbasedonthelatestpricedata.  Analystsusethemovingaveragetoexaminesupportandresistancebyevaluatingthemovementsofanasset’sprice.Amovingaveragereflectsthepreviouspriceaction/movementofasecurity.Analystsorinvestorsthenusetheinformationtodeterminethepotentialdirectionoftheassetprice.ItisknownasalaggingindicatorAdvancedTechnicalAnalysisAdvancedtechnicalanalysisusuallyinvolvesusingeithermultipletechnicalindicatorsorarathersophisticated(i.e.,complex)indicator."Sophisticated"becauseittrailsthepriceactionoftheunderlyingassettoproduceasignalorshowthedirectionofagiventrend.  SummaryAmovingaverageisatechnicalindicatorthatinvestorsandtradersusetodeterminethetrenddirectionofsecurities.Itiscalculatedbyaddingupallthedatapointsduringaspecificperiodanddividingthesumbythenumberoftimeperiods.Movingaverageshelptechnicaltraderstogeneratetradingsignals. TypesofMovingAveragesThefollowingarethetwobasicformsofmovingaverages: 1.SimpleMovingAverage(SMA)Thesimplemovingaverage(SMA)isastraightforwardtechnicalindicatorthatisobtainedbysummingtherecentdatapointsinagivensetanddividingthetotalbythenumberoftimeperiods.TradersSixEssentialSkillsofMasterTradersJustaboutanyonecanbecomeatrader,buttobeoneofthemastertraderstakesmorethaninvestmentcapitalandathree-piecesuit.Keepinmind:thereisaseaofindividualslookingtojointheranksofmastertradersandbringhomethekindofmoneythatgoeswiththattitl