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Moving Average |
  
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Moving Average |
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Overview
A Moving Average is an indicator that calculates the average value of prices (or any specified data series) over a period of predetermined period of time.
VT Trader supports seven popular types of moving averages: simple, weighted, exponential, sine weighted, triangular, end point, and volume-adjusted. Moving averages can be calculated on any data series including a trading instrument's open, high, low, close, volume, or even another indicator.
The only significant difference between the various types of moving averages is the weight assigned to the most recent data. Simple moving averages apply equal weight to the prices. Exponential and weighted averages apply more weight to recent prices. Triangular averages apply more weight to prices in the middle of the time period.
Interpretation
The most popular method of interpreting a moving average is to compare the relationship between a moving average of the price with the price itself. A buy signal is generated when the price rises above its moving average and a sell signal is generated when the price falls below its moving average.
Also popular are various types of moving average crossover systems. Such systems often include two or more moving averages crossing above/below each other and perhaps even utilizing other indicators as additional entry and exit confirmation signals. The combinations of conditions for these types of systems are almost limitless!
Moving averages can also be calculated and plotted on indicators. The interpretation of an indicator's moving average is similar to the interpretation of the price’s moving average: when the indicator rises above its moving average, it signifies a continued upward movement by the indicator; when the indicator falls below its moving average, it signifies a continued downward movement by the indicator.
Construction
1. Click the Ribbon>Technical Analysis menu>Indicators group>Indicator Builder command>Indicator Builder window's [New] button
2. In the General tab, type the following text for each field:
Name: Moving Average
Function Name Alias: vt_MOV
Label Mask: Moving Average (%Pr%,%tPr%,%mt%,%VShift%,%HShift%) | %MA%
Placement: Price Frame
Data Inspection Alias: Moving Average
3. In the Input Variable(s) tab, create the following variables:
[New] button...
Name: Pr
Display Name: Price
Type: price
Default: close
[New] button...
Name: tPr
Display Name: Periods
Type: integer
Default: 13
[New] button...
Name: mt
Display Name: MA Type
Type: MA Type
Default: Simple
[New] button...
Name: VShift
Display Name: Vertical Shift %
Type: float (with bounds)
Default: 0.0000
Min Bounds: -9999.0000
Max Bounds:= 9999.0000
[New] button...
Name: HShift
Display Name: Horizontal Shift
Type: Bars Forward
Default: 0
Min Bounds: 0
Max Bounds:= 9999
4. In the Output Variable(s) tab, create the following variables:
[New] button...
Var Name: MA
Name: (MA)
Line Color: red
Line Width: thin
Line Type: solid
5. In the Horizontal Line tab, create the following lines:
This indicator requires no horizontal lines.
6. In the Formula tab, copy and paste the following formula:
DataBars:= Ref(Pr,-HShift);
tmpMV:= Mov(DataBars,tPr,mt);
MA:= tmpMV+((tmpMV*VShift)/100);
7. Click the "Save" icon to finish building the Moving Average indicator.