Moving Averages
Trend-following indicators that smooth price data over time. Moving averages help identify trend direction, support/resistance levels, and generate trading signals through crossovers and price interactions.
Overview
Simple Moving Average (SMA)
Arithmetic mean of prices over a specified period. Equal weight given to all data points.
Exponential Moving Average (EMA)
Weighted average giving more importance to recent prices. More responsive to price changes.
Running Moving Average (RMA)
Modified exponential moving average using alpha = 1/period. Also known as Wilder's smoothing method.
Functions Reference
sma - Simple Moving Average helper function
sma(source: TimeSeries, period?: number = 12, priceIndex?: number = 1): numberParameters:
- source (TimeSeries) - Source data series
- period (number) - Number of periods for calculation (default: 12)
- priceIndex (number) - Index of price data (default: 1)
Returns:
number (moving average value at specific bar)
Code Example:
ema - Exponential Moving Average helper function
ema(source: TimeSeries, period?: number = 12, priceIndex?: number = 1): numberParameters:
- source (TimeSeries) - Source data series
- period (number) - Number of periods for calculation (default: 12)
- priceIndex (number) - Index of price data (default: 1)
Returns:
number (exponential moving average value at specific bar)
Code Example:
rma - Running Moving Average helper function
rma(source: TimeSeries, period?: number = 12, priceIndex?: number = 1): numberParameters:
- source (TimeSeries) - Source data series
- period (number) - Number of periods for calculation (default: 12)
- priceIndex (number) - Index of price data (default: 1)
Returns:
number (running moving average value at specific bar)
Code Example:
Best Practices
Period Selection
Common periods: 20 (short-term), 50 (medium-term), 200 (long-term). Adjust based on trading timeframe and market volatility.
EMA vs SMA
Use EMA for faster signals in trending markets, SMA for smoother signals in ranging markets. EMA reacts quicker to price changes.
Confirmation
Combine moving averages with volume, RSI, or other indicators for stronger signal confirmation. Never rely on MA alone.
False Signals
Moving averages lag price action. In choppy markets, use additional filters to reduce whipsaws and false breakouts.