Moving Average

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Moving Average

• Paskorn Champrasert

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What is Moving Average

• Moving averages are one of the most popular and
  easy to use tools available to the technical
  analyst.
• They smooth a data series and make it easier to
  spot trends, something that is especially helpful
  in volatile markets. They also form the building
  blocks for many other technical indicators and
  overlays

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Popular types of Moving Average

• Simple Moving Average (SMA)
• Exponential Moving Average (EMA)

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SMA (Simple Moving Average)

• Example
• Use 5 data to calculate
• 1011121314 60
• SMA 60/5 12
• Then next data (6th data) coming)
• 1112131415 65
• SMA 65/5 13

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10 Data SMA
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Exponential Moving Average (EMA)

• it will react quicker to recent price changes
  than a simple moving average
• reduce the lag in simple moving averages
• by applying more weight to recent prices
  relative to older prices

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Formular for EMA

• EMA(current) ( (Price(current) - EMA(prev) ) x
  Multiplier) EMA(prev)
• period-based EMA, "Multiplier" is equal to 2 / (1
  N) where N is the specified number of periods.
• For 10-period EMA Multiplier is

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• Example of an exponential moving average
• For the first period's exponential moving
  average, the simple moving average was used as
  the previous period's exponential moving average
  (yellow highlight for the 10th period).
• From period 11 onwards, the previous period's EMA
  was used. The calculation in period 11 breaks
  down as follows
• (C - P) (61.33 - 63.682) -2.352
• (C - P) x K -2.352 x .181818 -0.4276
• ((C - P) x K) P -0.4276 63.682 63.254

• EMA(current) ( (Price(current) - EMA(prev) ) x
  Multiplier) EMA(prev)

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EWMA why Exponential