Page 209 - THE MARKET WHISPERER

THE MARKET WHISPERER 20 5

10MA=15.5

If we also knew the trading data for a few days prior to this group of ten,
we would be able to calculate the MA for the 9th day, the 8th day, and so
on, connect all these results using a continuous line, and arrive at the MA
for 10 periods.

Example of Moving Average (MA) for FFIV

I have added to the FFIV daily chart the moving averages line for ten
periods (10MA). On July 27, 2010, the trading day closed at $86 [1], and
for that day, the 10MA was $80 [2]. If we add the closing price for July 27
[1] to the closing prices of the preceding nine days and average them, we
arrive at $80.

Traders tend to use two of a variety of moving averages: the Simple

Moving Average (SMA) and the Exponential Moving Average (EMA).
No need to panic! Understanding both, and the differences between them,

is not overly difficult.

SMART For intraday trading in five-minute candles, use a moving
MONEY average of eight or ten periods. For swing trading (one-day
candles), use 20, 50 and 200 periods.