A moving average is generally used to smooth out a time-series. It simply consists of calculating an average price for each bar of the time-series using preceding bars data.
Moving averages are the most commonly used indicators in technical analysis. By calculating an average price over a period, the moving average allows the trader to easily detect the direction of the trend in different timeframes and to measure the security's momentum by removing the time-series or stock price noise.
There are several types of moving averages. The most commonly used are: the Simple Moving Average and the Exponential Moving Average.
Trading financial instruments, including foreign exchange on margin, carries a high level of risk and is not suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to invest in financial instruments or foreign exchange you should carefully consider your investment objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with trading and seek advice from an independent financial advisor if you have any doubts.
