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