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Types of Gold Moving Averages - SMA, EMA, LWMA and SMMA


There are 4 types of gold trading moving averages:

  1. Simple gold trading moving average
  2. Exponential gold trading moving average
  3. Smoothed gold trading moving average
  4. Linear weighted gold trading moving average

 

The difference between these 4 gold trading moving averages is the weight assigned in to the most recent gold trading price data.

 

Simple Moving Average - SMA Gold Trading Indicator

Gold SMA indicator applies equal weight to the gold trading data used to calculate the simple moving average and is calculated by summing up the gold price periods of a gold trading chart and this value is then divided by the number of such gold price periods. For example gold trading simple moving average 10, adds the gold price data for the last 10 gold trading price periods and divides them by 10.

 

Exponential Moving Average - EMA Gold Trading Indicator

Gold EMA indicator applies more weight to the most recent gold trading price data and is calculated by assigning the latest gold trading price values more weight based on a percent P, multiplier that is used to multiply and assign more weight to the latest gold trading price data.

 

Linear Weighted Moving Average - LWMA Gold Trading Indicator

Gold LWMA indicator moving averages applies more weight to the most recent gold trading price data and the latest data is of more value than earlier gold trading price data. Linear Weighted gold trading moving average is calculated by multiplying each of the gold trading closing gold prices within the series, by a certain weight coefficient.

 

Smoothed Moving Average - SMMA Gold Trading Indicator

Gold SMMA Indicator is calculated by applying a smoothing factor of N, the smoothing factor is composed of N smoothing for N gold trading price periods.

 

The gold trading chart example below shows SMA, EMA and LWMA. The SMMA gold trading moving average is not commonly used so it is not shown below.

 

The LWMA gold trading indicator reacts fastest to gold price data, followed by the EMA and then the SMA.

SMA, LWMA, EMA - Types of Gold Moving Averages - SMA, EMA and LWMA

SMA, LWMA, EMA - Types of Gold Moving Averages - SMA, EMA and LWMA


 

Day Trading Gold with Exponential and Simple Moving Averages

The SMA and EMA gold trading moving averages are the most commonly used Moving averages to trade gold. Whereas the EMA gold trading moving average has a more sophisticated method of calculation, its more popular than the SMA gold trading moving average.



Simple Moving Average is the arithmetic mean of the closing gold prices in the gold trading price period based on the set time period where each time period is added and then it is divided by the number of time gold trading price periods chosen. If 10 is the gold trading price period used the gold price for the last ten gold trading price periods added up then it is divided by 10.



SMA gold trading indicator is the result of a simple arithmetic average. Very simple and some Gold traders tend to associate with the gold trading trend since it closely follows gold trading price action.

 

EMA on the other hand uses an acceleration factor and it is more responsive to the gold trading trend.


The SMA gold trading moving average is used in gold trading charts to analyze gold trading price action. If the gold trading price action in more than 3 or 4 time gold trading price periods the SMA then its an indication that long gold trading trades should be closed immediately and the bullish momentum of the buy gold trading trade is waning.



The shorter the SMA gold price period the faster it is to respond to gold trading price change. SMA gold trading indicator can be used to show direct information regarding the gold trading trend of the gold trading market and the strength by looking at its slope, the steeper or more pronounced slope of the SMA is, the stronger the Gold trend.

 

The Exponential Moving Average is also used by many gold traders in the same way but it reacts faster to the gold trading market moves and therefore it is more preferred by some gold traders.


The SMA and EMA can also be used to generate entry and exit points when gold trading. These Moving averages can also be combined with Fibonacci and ADX gold trading indicators to generate confirmation the gold trading signals generated by these moving averages.

 

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