MOVING AVERAGES: There are
two basic types of moving averages (MA): "Simple" and "Exponential." Simple
MAs show the average price for the selected time window. The
value of the MA depends on two factors: the value that is being averaged
(the open, high, low, or last/closing price) and the length or time period
of the MA (9 bars, 50 bars, etc.)
Exponential Moving Averages (EMA) are similar to simple MAs, except that
they give more weight to the latest data and respond to changes faster
than a simple MA. The major advantage of the EMA is that it
assigns greater weight to the last trading bar and less weight to the
oldest data. As a trader, you are generally more interested
in the latest input from the markets, since what has transpired recently is
usually more valuable than what happened 50 bars ago.
Selecting the Moving Averages Indicator on the "Indicators and Symbols" list displays the "Add Indicator" dialog, illustrated below, where you an choose among the different options available to have the Indicator display on the Chart as you'd like it to. Click "OK" to add the Indicator.
The Indicator is superimposed on the Chart, as shown in the following illustration.
