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TrendBeginner
Moving averages (SMA and EMA)
Smooth price to show the dominant direction. SMA weights all periods equally; EMA weights recent prices more.
Formula (conceptual view)
SMA = arithmetic mean of the last N closes. EMA = close × k + prior EMA × (1−k), with k = 2/(N+1).
Common parameters: SMA 20 / 50 / 200 · EMA 9 / 21
How to read
- ▸Price above an upward-sloping average suggests bullish bias in that window.
- ▸Fast/slow crossovers are popular — and late, with many false positives in ranges.
- ▸Use averages as a trend filter (context), not as the only entry trigger.
- ▸Timeframe matters: EMA 21 on M5 is not the same story as on D1.
Common mistakes
- ✕ Stacking six averages and calling it a “strategy”.
- ✕ Trading every cross without regime filter (range vs trend).
- ✕ Ignoring spread and cost on short-term crosses.
Works well with
Swing structureRSI as filterSupport/resistance