Moving averages are one most commonly used technical indicators.

A **moving average** is simply a way to *smooth out* price fluctuations to help you distinguish between typical market “noise” and the actual** trend direction**.

By “moving average”, we mean that you are taking the average closing price of a currency pair for the last ‘X’ number of periods.

On a chart, it would look like this:

As you can see, the moving average looks like a squiggly line overlayed on top of the price (represented by Japanese candlesticks).

This type of technical indicator is called a “**chart overlay**“.

The moving average (MA) is *overlayed* on the price *chart*! Ya dig?

Like every technical indicator, a moving average (MA) indicator is used to help us forecast future prices.

But why not just look at the price to see what’s happening?

The reason for using a moving average instead of just looking at the price is due to the fact in the real world, aside from Santa Clause not being real….. **trends do not move in straight lines**.

Price zigs and zags so a moving average helps smooth out the random price movements and help you “see” the underlying trend.

By looking at the **slope** of the moving average, you can better determine the trend direction.

As we said, moving averages **smooth out price action**.

There are different types of moving averages and each of them has its own level of “smoothness”.

Generally, the smoother the moving average, the slower it is to react to the price movement.

The choppier the moving average, the quicker it is to react to the price movement.

To make a moving average smoother, you should get the average closing prices over a longer time period.

The “length” or the number of reporting periods including the moving average calculation affects how the moving average is displayed on a price chart.

The shorter its “length”, the fewer the data points that are included in the moving average calculation, which means the closer the moving average stays to the current price.

This reduces its usefulness and may offer less insight into the overall trend than the current price itself.

The longer its length, the more data points that are included in the moving average calculation, which means the less any single price can affect the overall average.

If there are too many data points, price fluctuations may become “too smooth” that you won’t be able to detect any kind of trend!

Either situation can make it difficult to recognize if price direction may change in the near future.

For this reason, it’s important to select the length (or periods) that provides the level of price detail appropriate for your trading timeframe.

Now, you’re probably thinking, “C’mon, let’s get to the good stuff. How can I use this to trade?”

In this section, we first need to explain to you the two major types of moving averages:

**Simple****Exponential**

We’ll also teach you how to calculate them and give the pros and cons of each. Just like in every other lesson in the dnbcmarkets.com School of DNBC Global Markets Academy, you need to know the basics first!

After you’ve got that on lockdown like Argentinian soccer player __ Lionel Messi’s__ ball-handling skills, we’ll teach you the different ways to use moving averages and how to incorporate them into your trading strategy.

By the end of this lesson, you’ll be just as smooth as Messi’s!

Before we move on, just remember that moving averages **smooth price data** to form a trend-following technical indicator.

** They do NOT predict price direction; instead, they define the current direction with a lag. **

Are you ready?

If you are, give us a “Heck yeah!”

If not, go back and reread the intro.

Once you’re pumped and ready to go, head to the next lesson.

Lesson 6: What is a Japanese Candlestick? Lesson 7 :Japanese Candlestick Anatomy Lesson 8:Basic Japanese Candlestick Patterns Lesson 9: Single Candlestick Patterns Lesson 10: Dual Candlestick Patterns Lesson 11: Triple Candlestick Patterns Lesson 12:Japanese Candlestick Cheat Sheet Lesson 13: Candlesticks with Support and Resistance Lesson 14: Common Mistakes That New Traders Make With Japanese Candlesticks Lesson 15: Summary: Japanese Candlesticks

Lesson 16 : Fibonacci Trading Lesson 17: How to Use Fibonacci Retracements Lesson 18: Fibonacci Retracements are NOT Foolproof Lesson 19: How to Use Fibonacci Retracement with Support and Resistance Lesson 20: How to Use Fibonacci Retracement with Trend Lines Lesson 21: How to Use Fibonacci Retracement with Japanese Candlesticks Lesson 22: How to Use Fibonacci Extensions to Know When to Take Profit Lesson 23: How to Use Fibonacci to Place Your Stop so You Lose Less Money Lesson 24: Summary: Fibonacci Trading

Lesson 25: What Are Moving Averages? Lesson 26: Simple Moving Average (SMA) Explained Lesson 27: Exponential Moving Average (EMA) Explained Lesson 28: Simple vs. Exponential Moving Averages Lesson 29: How to Use Moving Averages to Find the Trend Lesson 30: How to Use Moving Average Crossovers to Enter Trades Lesson 31: How to Use Moving Averages as Dynamic Support and Resistance Levels Lesson 32: How to Use Moving Average Envelopes Lesson 33: How to Analyze Trends With Moving Average Ribbons Lesson 34: How to Trend Trade with Guppy Multiple Moving Average (GMMA) Lesson 35: Summary: Using Moving Averages

Lesson 36: How to Use Bollinger Bands Lesson 38: How to Use the MACD Indicator Lesson 37: How to Use Keltner Channels Lesson 39: How to Use Parabolic SAR Lesson 40: How to Use the Stochastic Indicator Lesson 41: How to Use RSI (Relative Strength Index) Lesson 42: How to Use Williams %R (Williams Percent Range) Lesson 43: How to Use ADX (Average Directional Index) Lesson 44: Ichimoku Kinko Hyo Lesson 45: Trading with Multiple Chart Indicators Lesson 46: What is the Best Technical Indicator in Forex? Lesson 47: Summary: Popular Chart Indicators