Moving Averages (SMA/EMA/WMA/VWMA)

What are Moving Averages?

Moving Averages (MAs) smooth price data to help identify trend direction and reduce market noise. Different types respond differently to recent prices.

MA Example

Types of Moving Averages

  • SMA (Simple): Arithmetic mean of prices over the period.
  • EMA (Exponential): Weights recent prices more heavily; reacts faster.
  • WMA (Weighted): Linear weights with recent prices having higher impact.
  • VWMA (Volume-Weighted): Weights closes by traded volume.

Common interpretations:

  • Trend Bias: Price above MA suggests bullish bias; below suggests bearish bias.
  • Dynamic Support/Resistance: MAs often act as moving support/resistance.
  • Crossovers: Short MA crossing above long MA can signal bullish shift (and vice versa).

Calculation (Conceptual)

  • SMA = Sum(Price over N) / N
  • EMA = EMA(previous) + α × (Price − EMA(previous)), where α = 2 / (N + 1)
  • WMA = Sum(Weight × Price) / Sum(Weights)
  • VWMA = Sum(Volume × Price) / Sum(Volume)

Available Settings in FutPrint

  • Type: SMA, EMA, WMA, VWMA
  • Period: Default 20 (commonly 9/20/50/100/200 are used)
  • Source: Close (or configurable)
  • Offset/Shift: Optional visual shift
  • Style: Line color, thickness

Practical Usage and Best Practices

  • Use a fast MA (e.g., 9) with a slow MA (e.g., 21/50) for crossovers.
  • Align entries with higher-timeframe MA direction for trend-following.
  • Combine with ATR/Bollinger Bands to gauge volatility context.

Limitations:

  • All MAs are lagging; aggressive settings may increase noise.
  • Crossovers in choppy markets can whipsaw.

Using MAs in the Platform

  1. Add from Technical Indicators → Moving Averages.
  2. Select type and period; adjust style and source as needed.
  3. Optionally add multiple MAs for a ribbon/crossover system.

See Also