V.18:6 (60-65):Using The Simple Moving Average by Martin J.Pring

Using The Simple Moving 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 the trend.

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. Here’s why.