Explanation of Moving Average

I will explain the meaning of the Moving Average. Moving Average is combined from the word Moving which means movement and Average which means the average of. Then the Moving Average is the moving average of a price in a certain period. Moving Averages are commonly used by traders to identify the direction of the trend.

Before I give an example, I give an explanation for the use of this Moving Average indicator system.

Period : used to calculate the number of candles and combined into an average

Method: the method used to calculate the average number of the period usually consists of Simple, Exponential, Smoothed and Linear Weighted

Apply To: this is usually used to make calculations for the Close , Open , High , Low , Median Price , Typical Price and Weighted Close prices.

Here I will give an easy to understand example of how to use it.

If we use the H1 Timeframe (candles per 1 hour) if the period is set to 24 with a simple method and apply to close, the moving average calculation will be 1 day with a simple calculation and the price closes as usual.

H1 = 1 hour and the period is set to 24 aka 24 x 1 hour (1 candle) so 24 hours aka 1 day. Then the Moving Average trend will take from the average 24 hours/24 candles on the H1 Timeframe.

I will take another example, we take the H4 Timeframe (candles per 4 hours) if the period is set to 30 with a simple method and apply to close then the moving average calculation will be 5 days (1 market week) with a simple calculation and the price closes as usual.

H4 = 4 hours and the period is set to 30 aka 30 x 4 hours (1 candle) so 120 hours or 5 days. Then the Moving Average trend will take from an average of 120 hours/30 hour candles on the H4 Timeframe.

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