If you draw a simple 5-period moving average on a 1-hour chart, you have to add the close-up prices for the last 5 hours and then divide that number by 5. Dubai! You have the average closing price in the last five hours! Add those average prices together to get a moving average!

If you want to plot a simple 5-period moving average on a 30-minute chart, you add up the final prices of the last 150 minutes, and then divide that number by 5. If you want to draw a simple moving average of 5 periods in 4 hours. Graph… Okay, okay, we know, we know. You got the content!

Most technical software does all these calculations for you. The reason we made you a little tired (yawning!) Of “how” you need to calculate the simple moving average is to understand and know how to edit the screen.

Understanding how a monitor works means that you can set up and create different strategies as the market environment changes. Also know that just like any other Forex monitor, moving averages work with a delay. Because you are taking price averages in the past, you are actually only looking at the general direction of recent movements and the general direction of short-term price movements in the “future”.

Disclaimer: Moving averages do not make you a psychologist!

Here is an example of how moving averages smooth out price movements.