Although trading can be one of the best ways to increase your capital, we must remember that it is a risky practice and requires a plan / strategy to work. Unfortunately, unplanned trades are almost certainly destined to fail, and considering that failing in this world results in losing money, we can't afford that.
The Moving Averages (MA) are technical trend indicators, drawn based on calculations / averages after analyzing a series of data regarding the supply and demand processes in the markets.
By being able to detect the course of a trend, moving averages allow us to project a price path and position inputs at key points for profit. This indicator, like all others, must be correctly executed to act on the market.
Simple Moving Average (SMA)
The simple moving average is an unweighted moving average. This means that each day in the dataset is equally important and weighted equally. As each new day ends, the oldest data point is discarded and the newest data point is added at the beginning.
Exponential Moving Average (EMA)
The main difference from EMA is that old data points never go below average. That is, the old data points retain a multiplier even if they are outside the length of the selected data series.
The EMA calculation favors the most recent prices, since it gives them a higher weight. Which is significantly reduced as prices move away in time.
Importantly, when entering trading, many cryptocurrency traders employ moving averages tools for multiple purposes, based on their stated goals. However, it is important to highlight that when making decisions to make an investment, EMAs are variable tools that must be used and combined with other instruments. In order to look for a greater probability of success in the operations carried out.
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