Trading With Moving Averages - SMA’s & EMA’s
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Moving Averages are useful in confirming market direction and revealing the strength of that direction. They smooth out data to create a single flowing line that reveals predominant trends in the market. They use historical data to show price direction and are therefore considered lagging indicators. The Exponential Moving Average (EMA) is the enhanced version of the SMA. We examine both then discuss how to best incorporate moving averages into your trading strategy. The optimal time to enter a trade long has passed before the new trend on a chart shows an EMA.