About Moving Average Strategy - Trading Strategy Example

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

This Indicator is a trend following indicator that's used by the traders for 3 things:

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

The Index Moving Average or MA is used to smooth out market volatility of price action. The MA(Moving Average) is an overlay indicator & it is placed on top or super-imposed on the price chart.

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

Moving Average Strategies Example - About the Moving Average MA Strategies

Stock Index Moving Average - MT4 Chart Indicators

Calculation of the Moving Average

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

If the MA(Moving Average) uses the 10 period to calculate the average of the price then it is referred to as a 10 period Index 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 Moving Average.

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

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About Moving Average Strategy - Trading Strategy Example

Calculation of the Moving Average