After understanding the meaning of MA and EMA, we can understand their uses. Simply put, when comparing the relationship between numerical value and average price, MA is enough, while when comparing the trend of average price, EMA is more stable. Sometimes, when the average value is not important, EMA is also used to smooth and beautify curves.
SMA(X, n, m), find the n-day moving average of x, and m is the weight. Algorithm: if Y=SMA(X, n, m), then Y=(M*X+(N-M)*Y')/N, where y' represents the value of y in the last period, and n must be greater than m.
The recommended trading method of EMA is Granway's Eight Rules of EMA:
1, the moving average changes from a downward trend to an upward trend, and the price breaks through the moving average from below as a buying signal.
2. The price fell below the moving average, but it soon returned to the moving average, and the moving average still maintained an upward trend, which was a buying signal.
3. The price is above the moving average, but it falls for a short time but does not fall below the moving average, which is a buying signal.
4. The price plummets and stays away from the moving average after falling below the moving average, which is a buying signal.
5. The moving average turns from an upward trend to a market, or falls, and the closing price falls below the moving average on the last day, which is a selling signal.
6. The price breaks through the moving average upward, but soon returns to below the moving average, and the moving average still maintains a downward trend, which is a selling signal.
7, the price is below the moving average, short-term upward but did not break through the moving average and immediately turned down, which is a selling signal.
8. The price surge breaks through the moving average upward, and staying away from the moving average is a selling signal.
Tips: The above contents are for reference only.
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