SMA, Exponential Moving Average, Linear Weighted Moving Average and SMMA
There are four types of metals trading moving averages:
- Simple metals trading moving average
- Exponential metals trading moving average
- Smoothed metals trading moving average
- Linear weighted metals trading moving average
The difference between these 4 metals trading moving averages is the weight assigned in to the most recent metals price data.
SMA Indicator
Metals Simple Moving Average indicator applies equal weight to the metals trading data used to calculate the simple moving average and is calculated by summing up the metals price periods of a metals chart and this value is then divided by the number of such metals price periods. For example metals trading simple moving average 10, adds the metals price data for the last 10 metals price periods and divides them by 10.
EMA Indicator
Metals Exponential Moving Average indicator applies more weight to the most recent metals price data and is calculated by assigning the latest metals price values more weight based on a percent P, multiplier that is used to multiply and assign more weight to the latest metals price data.
LWMA Indicator
Metals Trading Linear Weighted Moving Average indicator moving averages applies more weight to the most recent metals price data and the latest data is of more value than earlier metals price data. Linear Weighted metals trading moving average is calculated by multiplying each of the metals trading closing metals prices within the series, by a certain weight coefficient.
SMMA Indicator
Metals SMMA Indicator is calculated by applying a smoothing factor of N, the smoothing factor is composed of N smoothing for N metals price periods.
The metals chart example illustrated and explained below shows Simple Moving Average, Exponential Moving Average and Linear Weighted Moving Average. The SMMA metals moving average isn't oftenly used so it isn't shown below.
The Linear Weighted Moving Average indicator reacts fastest to metals price data, followed by the Exponential Moving Average and then the SMA.
SMA, Linear Weighted Moving Average, Exponential Moving Average - Types of Metals Trading Moving Averages - Simple Moving Average, Exponential Moving Average and LWMA
Day Trading Metals with Exponential and Simple Moving Averages
The Simple Moving Average and Exponential Moving Average metals trading moving averages are the most commonly used Moving averages to trade metals. Whereas the Exponential Moving Average metals trading moving average has a more sophisticated method of calculation, its more popular than the Simple Moving Average metals trading moving average.
Simple Moving Average is the arithmetic mean of the closing metals prices in the metals price period based on the set time period where each time period is added and then it is divided by the number of time metals price periods chosen. If 10 is the metals price period used the metals price for the last ten metals price periods added up then it is divided by 10.
SMA metals indicator is the result of a simple arithmetic average. Very simple and some Metals traders tend to associate with the metals trend since it closely follows metals price action.
EMA on the other hand uses an acceleration factor and it is more responsive to the metal trend.
The Simple Moving Average metals trading moving average is used in metals charts to analyze metals price action. If the metals price action in more than 3 or 4 time metals price periods the Simple Moving Average then it's an indication that long metal trades should be closed immediately and the bullish momentum of the buy metals trade is waning.
The shorter the Simple Moving Average metals price period the faster it is to respond to metals price change. Simple Moving Average indicator can be used to show direct information regarding the metals trend of the metal market and the strength by looking at its slope, the steeper or more pronounced slope of the Simple Moving Average is, the stronger the Metals trend.
The Exponential Moving Average is also used by many metals traders in the same way but it reacts faster to the metal market moves and therefore it is more preferred by some metal traders.
The Simple Moving Average and Exponential Moving Average can also be used to generate entry and exit points when metals trading. These Moving averages can also be combined with Fibonacci and ADX indicators to generate confirmation the metals signals generated by these moving averages.
