When dealing with forex, it is very important to be a good trader with a good technical and analytical skill to manage forex indicators. This is one of key success that will lead you to be a great PAMM trader or PAMM manager. As a forex trader, you have an advantage. You won’t have to risk your own capital. Within the PAMM system, it is possible for you to multiply your profit by managing the PAMM investors’ capital.
Talking about forex indicators, there are two types of indicators: classic indicators and modern ones. Now we will talk about modern indicators in the forex world. These indicators have a complex calculation that will only be done by computer. These modern indicators are usually developed from the classic one, or maybe by putting together some classic indicators in a certain formula to get a more accurate prediction in the market.
There are so many modern indicators in this world of forex. Maybe hundreds or even more. One of this modern indicator is called: Moving Average (MA). This is the most standard indicator and maybe is one of the oldest indicators in the world. Moving Average indicator is very easy-to-read by traders and has a simple but wide application. That is why many forex traders like to put it on their metatrader and use it to determine trend. Many people even say that this simple indicator is a condition to do an online trading. By placing this indicator, PAMM traders are expected to get a smooth and simple line of movements.
Moving Average indicator is calculated from the average of forex pairs movements. It is possible to calculate the highest and lowest prices, opening and closing prices or even the median prices. Since it is calculated from the average price, the next price is taken from the previous average price. By seeing the characteristic of its formula, MA could be included as a lagging indicator, since it calculates the past prices, not the upcoming ones. The longer the MA, the more the lag. This is why MA will be more suitable for a long-term trading instead of placing it in the opening position. In the long-term trading, support identifications, resistances, continuity trends or reversal patterns will be represented.
We can easily understand the meanings of MA. If the current price is below the MA line, it means the trend is going down. If the current price is beyond the MA line, the trend is going up. There are 2 popular types of Moving Average :
1. Simple Moving Average (SMA)
SMA is formed by computing the average price of a security over a spesific number of periods. The mathematical formula is the flat price from the average price. SMA represents a true average of prices for the entire time period.
2. Exponential Moving Average (EMA)
In this type of MA, we place a mathematical weight formula. More weight is given to the latest data, so it will create a more responsive line to the price changes. EMA has less lag and therefore more sensitive to the recent prices and the price changes.
Happy trading using PAMM investments system !
Don’t forget to read this important article for PAMM trader
1. How to become a PAMM Trader
2. Understanding your Forex Trader Level as PAMM Trader