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Key Features and Benefits of VT Trader™

Moving Average (MA)

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.

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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.

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