The Simple moving average indicator is the simplest auxiliary tool that allows earning profit during a work in the financial markets. Its essence is simple and working with it turns out to be the unalloyed pleasure for a trader. The main thing to know is where the moving average is directed. If it is directed upwards, then it is recommended to buy the Call option. In this case, we can say that the buyers are prevailing in the market currently. If the indicator is directed downwards, then the sellers are prevailing in the market. In this case, it is recommended to buy the Put option. This is because the current movement is descending.
This indicator is one of the most popular and widespread among auxiliary tools used by traders. It is popular because it is very easy to use. This is because this indicator is versatile. You can earn a profit even if you work with this single indicator only. However, the majority of modern indicators is based on the usage of this one, so you can discover its elements in other auxiliary tools too.
The Simple moving average indicator appears to be the line which is set on a chart. This line moves in the same direction with the trend’s line which can be delineated by a trader independently based on the current maximums and minimums. This auxiliary tool provides the possibility to view the smoothed market movement, determine the current direction of the market’s development, as well as to see its development relating to the general trend. For this reason, this indicator can be used as the basis for construction of the future strategies.
Currently, several types of moving averages exist. These are simple moving averages, weighted moving averages, smoother moving averages, and exponential moving averages. The majority of traders use exponential moving averages. This type provides an opportunity to follow the current market movement precisely. This line is some sort of compromise between oversensitivity and indicator’s lagging in relation to a chart.
From the perspective of a layout, this indicator is plotting depending up the time scale on which it would be set. At the same time, if you use several lines of this indicator with different periods, you can create your own and, at the same time, pretty effective trading strategy. For example, if you use the Simple moving average indicator along with the line that has code 200, you will able to determine the long-term market movements. If the period is 50 days, an indicator will show the mid-term trends. If a trader wants to determine the short-term trends, he can use period of 10 days.
Opportunities given by the Simple moving average binary options’ indicator are almost limitless currently. Furthermore, many indicators show the correlation between the price chart and the moving average in some way.
As mentioned above, trading with this indicator is pretty simple. If it is directed upwards, then the ascending movement is prevailing in the market. Therefore, a trader can buy the Call option. When the line is directed downwards, the bears are prevailing in the market, and they define the current movement as a descending one. Therefore, a trader is recommended to buy the Put binary option.