Moving Averages - Technical Indicators
Moving averages is one of the most popular technical indicators. Moving
averages show and average value of the stock price over the period of
time. Moving averages are often compared to the security price itself or
to the moving averages of securities price on a different time span.
Typically a buy signal is generated when a securities price rises above
moving average and a sell signal is generated when the securities price
falls below moving average. There are several types of moving averages:
simple moving average, exponential moving average, triangular moving
average, variable and weighted moving average. Moving averages can be
calculated on any data series and often are used as a part of other
technical indicators. Commonly used simple moving average is calculated as
where n is the number of days and Close(j) is the closing stock price
on a day j.