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Classic article the setup and use of averages

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Th bestforexrebatecompany article was written on November 2, 2005 rebatesforexbrokers are one of the most commonly used analysis best forex rebate companydicators, which reflect the average cost of the market over a period of time changes in the average fxrebatecentral multiple forexrebatecommission form a system of averages can provide a basis for determining market trends, but also play a role in support and resistance I. The composition of averages averages, according to the different ways of calculation Commonly divided into ordinary averages, exponential averages, smoothed averages and weighted averages Here we mainly introduce ordinary averages and exponential averages ordinary averages: the ordinary average of the closing price of a certain period of time in the past, such as the 20-day average, is the closing price of the past 20 trading days added up and divided by 20, you get a value; then yesterday backwards 20 trading days, the same method to calculate another value, and so on. And so on, these values are connected to form a general average exponential average: the formation of the way and the general average is exactly the same, but in the calculation of the average value, the calculation method is different, such as the 20-day average, the exponential average takes the index weighted average method, the closer to the day, the greater the proportion, rather than the average weight as in the general average, so the exponential average in most cases can The advantages and disadvantages of the two: there is no absolute advantage or disadvantage, in different stages of operation, the two can reflect different effects, the selection of the experience component is relatively larger personal more accustomed to the use of exponential averages, the combination of multiple exponential averages to assist in determining market trends The following chart is the effect of the two different averages reflected in the daily chart of EUR / USD, where the average parameter settings are 20 The red cashback forex is the normal 20-day SMA and the blue SMA is the 20-day exponential SMA. As can be seen from the picture, in most cases, the speed of inflection of the exponential SMA is relatively earlier than the normal SMA, which can keep up with the market trend relatively faster Note: Generally speaking, the calculation price of the SMA uses the closing price, but it can also use the minimum price, maximum price or opening price depending on the demand II. Multiple regular averages are arranged together, this is to form a more helpful analysis of the averaging system In general, when using the averaging system for analysis, the common parameters are arranged as follows: A, 5, 10, 20, 30, 40, 50 (equal span arrangement) B, 5, 8, 13, 21, 34, 55 (Fibonacci arrangement) on the basis of these two arrangements Third, the use of averaging system alignment state to determine the market rhythm of the alignment state of the averaging system, generally can be divided into convergence, divergence, parallel three states which convergence state indicates that the market has experienced a unilateral trend after the original momentum digestion or accumulation of new running momentum process, the longer the convergence, the greater the momentum generated; divergence state The divergence state is a prelude to the outbreak of kinetic energy generated after the convergence; parallel state indicates that the market has been a unidirectional outbreak of kinetic energy, triggering a new unilateral trend in the unilateral market rhythm, the cycle of these three states: convergence-〉divergence-〉parallel-〉 convergence and in the consolidation city, it is reflected in the cycle of convergence-〉divergence-〉 convergence, until the breakthrough occurs IV, the conventional use of averages two The basic function of 1, "golden cross" and "dead cross" indicates the basic signal here selected the daily chart of the 5 and 13 SMAs as a golden cross and dead cross issued on the basis of buying and selling signals, from Figure 3 can be found, in addition to the blue circle in the oscillation trend, the In different currencies and different time periods, the parameters of the SMA crossover need to be set according to local conditions and cannot be generalized, for example, it is not advisable to place the parameters of 5 and 13 directly on the hourly chart of EUR/USD. Lead to too much unnecessary trading (profit and loss are within 20 points of the trading signal), and easy to lose the homeopathic single 2, the average of the support and resistance of the exchange rate Here we again use Figure 2 to understand the support and resistance provided by the average system when the exchange rate runs below the average system, the average system will play an obvious resistance role, hindering the rebound of the exchange rate; similarly, when the exchange rate stands firm in After the SMA system, the SMA system will play an obvious support role, the reason for this role lies in the calculation of the SMA reflects the market cost changes, this support and resistance effect is also known as the "SMA repulsion" of course, the SMA also has an attractive, when the unilateral operation of the exchange rate farther away from the SMA system, the The average will also issue a "gravitational" effect, the average itself to follow the direction of the currency run forward, but also pull back the price of five, the use of special averages so-called special averages refers to a specific stage can play a clear long and short watershed averages, in general we will use it in the main trend of the unilateral market, such as the following chart: EUR / USD The weekly chart, in which the 55-week exponential average reflects the special long-short watershed effect, the red line in the chart is the 55-week exponential average, which has played a supportive role in the long term upward trend in the past, while the euro has been maintaining a retracement after falling below this average this year This chart is the 4-hour chart of the exponential average of the parameter 55, in the picture held in the blue box in the course of the unilateral trend, this average Until the average was broken once, the decline in the euro was gradually eased Most of the time, as soon as a unilateral trend is formed, such a special indicator of the average is present, generally in the small trend guidance is not significant, mainly used in large continuity of the higher trend to assist in the analysis, to assist in determining whether the direction of change or Whether there are signs of deceleration when seeking these special averages, mainly for repeated testing, the more times effectively touched, the more indicative the averages will be
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