Types of Bitcoin Moving Averages
There are 4 types of bitcoin trading moving averages:
- Simple bitcoin trading moving average
- Exponential bitcoin trading moving average
- Smoothed bitcoin trading moving average
- Linear weighted bitcoin trading moving average
The difference between these 4 bitcoin trading moving averages is the weight assigned in to the most recent bitcoin trading price data.
Simple Moving Average
Bitcoin Simple Moving Average indicator applies equal weight to the bitcoin trading data used to calculate the simple moving average and is calculated by summing up the bitcoin trading price periods of a cryptocurrency chart and this value is then divided by the number of such bitcoin trading price periods. For example bitcoin trading simple moving average 10, adds the bitcoin trading price data for the last 10 bitcoin trading price periods and divides them by 10.
Exponential Moving Average
Bitcoin Exponential Moving Average indicator applies more weight to the most recent bitcoin trading price data and is calculated by assigning the latest bitcoin trading price values more weight based on a percent P, multiplier that is used to multiply and assign more weight to the latest bitcoin trading price data.
Linear Weighted Moving Average
Bitcoin Linear Weighted Moving Average indicator moving averages applies more weight to the most recent bitcoin trading price data and the latest data is of more value than earlier bitcoin trading price data. Linear Weighted bitcoin trading moving average is calculated by multiplying each of the bitcoin trading closing prices within the series, by a certain weight coefficient.
Smoothed Moving Average
Bitcoin SMMA Indicator is calculated by applying a smoothing factor of N, the smoothing factor is composed of N smoothing for N bitcoin trading price periods.
The cryptocurrency chart example illustrated below shows Simple Moving Average, Exponential Moving Average and Linear Weighted Moving Average. The SMMA bitcoin moving average is not commonly used so it is not shown below.
The Linear Weighted Moving Average cryptocurrency indicator reacts fastest to bitcoin trading price data, followed by the Exponential Moving Average and then the SMA.
SMA, Linear Weighted Moving Average, Exponential Moving Average - Types of Bitcoin Moving Averages - Simple Moving Average, Exponential Moving Average and LWMA
Day Trading Bitcoin with Exponential and Simple Moving Averages
The Simple Moving Average and Exponential Moving Average bitcoin trading moving averages are the most commonly used Moving averages to trade bitcoin. Whereas the Exponential Moving Average bitcoin trading moving average has a more sophisticated method of calculation, its more popular than the Simple Moving Average bitcoin trading moving average.
Simple Moving Average is the arithmetic mean of the closing bitcoin trading prices in the bitcoin trading price period based on the set time period where each time period is added and then it is divided by the number of time bitcoin trading price periods chosen. If 10 is the bitcoin trading price period used the bitcoin trading price for the last ten price periods added up then it's divided by 10.
SMA cryptocurrency indicator is the result of a simple arithmetic average. Very simple and some Bitcoin traders tend to associate with the bitcoin trend since it closely follows bitcoin trading price action.
EMA on the other hand uses an acceleration factor and it is more responsive to the cryptocurrency trend.
The Simple Moving Average bitcoin trading moving average is used in cryptocurrency charts to analyze bitcoin trading price action. If the bitcoin trading price action in more than 3 or 4 time bitcoin trading price periods the Simple Moving Average then it's an indication that long cryptocurrency trades should be closed immediately and the bullish momentum of the buy trade is waning.
The shorter the Simple Moving Average bitcoin trading price period the faster it is to respond to bitcoin trading price change. Simple Moving Average cryptocurrency indicator can be used to show direct information regarding the bitcoin trend of the btcusd trading market and the strength by looking at its slope, the steeper or more pronounced slope of the Simple Moving Average is, the stronger the Bitcoin trend.
The Exponential Moving Average is also used by many traders in the same way but it reacts faster to the btcusd trading market moves and therefore it is more preferred by some cryptocurrency traders.
The Simple Moving Average and Exponential Moving Average can also be used to generate entry and exit points when bitcoin trading. These Moving averages can also be combined with Fibonacci and ADX indicators to generate confirmation the cryptocurrency signals generated by these moving averages.
