Average by Martin J.Pring
Moving averages are the mainstay of technical analysis, and
at the heart of moving averages is the perennially useful
simple moving average. It can help smooth out random
fluctuations in the financial markets, offering a better look at
Technical analysts agree that prices
move in trends, and that once under way, trends tend to continue.
However, a quick glance at any
freely traded financial market suggests that while trends do exist,
there is a substantial amount of
random noise that makes identifying trend reversals a challenging
task. Moving averages (MA) are a well-known, long-established technique that helps smooth out these fluctuations.
I could write a book on the different types of moving
averages that have been developed over the years, but in my
own work, I keep coming back to the simple moving average.