About Moving Average Strategy - Trade Strategy Example

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

This Indicator is a trend following indicator that's used by traders for three things:

• Identify the beginning of a new Stock Index market trend
• Measure the sustainability of the new Stock Index trend
• Identify the ending of a trend and signal a reversal signal

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

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

Stock Index Moving Average Technical Indicator - MT4 Chart Indicators

Calculation of the Moving Average

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

If the MA uses the 10 period to calculate the average of the price then it's referred to as a 10 period Stock Indices moving average, because most Indices 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 Moving Average the price of the last 10 days is averaged, Stock Indices moving average indicator is then updated constantly after every new Stock Index price period. So after each new Stock Index price period is formed the moving average is then calculated afresh using the most recent 10 price periods, that's why it is called a moving average because the average is constantly moving when price data is updated.