What is Simple Moving Average
Simple Moving Averages are an indicator, which is used in technical analysis and it gives us price history on average daily price on some period time.
When any stock price moving upward and downward. The most time frame used in simple moving average is 30, 50, 100, 200 days. Short term trader may use 15, 20, 30 days time frame.
The short time frame is more sensitive while the long time frame is less sensitive. There is no right time frame which gives you best figure but in general, an analyst uses 30,50,100,200 days time frame only.
When the stock price moves upward the simple moving average, it means the stock price may go up from the current price while stock price moves down the simple moving average, it means the stock price may go down from the current price.
Benefits of Simple Moving Average
- It gives us market trend confirmation
- It gives us support and resistance confirmation
Conclusion
Simple Moving Average is effective tools in technical analysis which give us market trend confirmation as well as support and resistance confirmation.
Trader and investor should learn to identify the securities for further analysis and act accordingly in the trade as well as in investment. Simple Moving Averages are following a bullish or bearish trend in the market cycle.
It will help to trader or investor to ensure that a trader or investor is in on right track or not but only simple moving average is not too much effective in technical analysis.
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