About the Moving Average Stock Index Trading Strategy - Trading Strategy Example

Stock Indices Moving average is one of the most widely used Stock Indices Trading Indicator because it is simple and easy to use.

This Stock Indices Indicator is a trend following indicator that is used by traders for three things:

• Identify the beginning of a new Stock Indices market trend
• Measure the sustainability of the new Stock Indices trend
• Identify the end of a Stock Indices trend and signal a reversal Stock Indices trading signal

The Stock Indices Moving Average or Stock Indices MA is used to smooth out the volatility of Stock Indices price action. The MA is an overlay Stock Indices technical indicator and it is placed on top or superimposed on the Stock Indices price chart.

On the example Stock Indices trading chart below the blue line represents a 15 period MA, which acts to smooth out the volatility of the price action.

Stock Indices Moving Average Technical Indicator - MetaTrader 4 Stock Indices Chart Indicators

Calculation of the Moving Average

The Stock Indices Moving Average is also known as MA - is calculated as an average of Stock Indices price using the most recent price data.

If the MA uses the 10 period to calculate the average of the Stock Indices price then it is referred to as a 10 period Stock Indices moving average, because most Stock Traders use the day as the standard price period we shall just refer to it as the 10 day MA.

To calculate the ten day MA the price of the last 10 days is averaged, the Stock Indices moving average indicator is then updated constantly after every new Stock Indices price period. So after every new Stock Indices price period is formed the moving average is then calculated afresh using the most recent 10 Stock Indices price periods, that is why it is called a moving average because the average is constantly moving when Stock Indices price data is updated.