Moving average (MA for short) is an indicator: a tool that analyzes the market and helps predict whether the price of an asset will rise or fall. MA is calculated on the basis of past prices and displays the averaged, smoothed price of the asset without the noise from random fluctuations for a selected period.
Visually, the moving average is a line. This line follows the chart, so MA is a trend indicator. It helps to determine the direction of the price movement and find the moments when the price will turn around. Thus, the moving average is a tool for trend trading.
There are 3 main types of moving averages: simple moving average (SMA for short), weighted moving average (WMA for short) and exponential moving average (EMA for short).
