What Is a Moving Average (MA)?

The Moving Average (MA) indicator helps traders in smoothing out price fluctuations and determining the actual trend. The basic idea behind the moving average is to take the average price for an X amount of periods of an asset. 

Moving averages help traders with price analysis. It also helps them in determining their next potential move in the markets.

The graph of a Moving Average (MA) usually consists of two lines:

Where EMA = Exponential Moving Average

Smoothing = 2

You can increase the smoothing factor if you want the recent price observations to have a greater influence on the EMA technical indicator.

Moving Average (MA) is a great indicator that is used by a lot of traders, however, a combination of multiple technical indicators is preferred for determining the direction of the market accurately. Other commonly used technical indicators (TA’s) include relative strength index (RSI), Moving Average Convergence Divergence (MACD), on-balance volume (OBV), Aroon indicator, and the stochastic oscillator. All of these indicators have their specific benefits as they allow a trader to view an asset’s chart from multiple angles and come up with a better investment decision.