When trading currencies we often use different methods in order to analyze the graphs and have the biggest probability to make profits. Forex in Singapore is a very popular industry where traders have many different trading platforms and brokers on their disposal. There are many Singapore brokers that use a MetaTrader platform. MT4 is popular in the entire world by a high selection of trading instruments it has to offer.
As you know, the moving average or as it is also called the dynamic average is one of the most widely used indicators in technical analysis. Unfortunately it is not offered on every trading platform. MetaTrader is one of the most used platforms where you can use the Moving Average indicator. Like any trend-following indicator, moving average performs well during the creation of a new strong trend, but its effectiveness decreases when trading currencies takes place within the price band. For this reason, the moving average is better to use for tracking trends, but not for their predictions. For that reason as part of the technical analysis the moving average indicator is useful after the trend has started in order to watch its development and find the correct point of entering and leaving the market.
Thus, the main usage for the moving average in technical analysis is to confirm the trend. There are certain central ways that a trader can use to determine the trends by movements of a certain currency pair. The easiest method of analysis is a simple watching of the direction of the moving average instrument. This lets you to see strong increasing or decreasing trends. Another method is watching the positions of the current price and the indicator of the moving average. If the price is above the moving average, then the market is in increasing trend, the opposite situation indicates the presence of a downward trend.
Moving Average may also be applied as an instrument of the trend’s end and the signal for closing the trading positions. If the indicator’s line of the moving average went along the trend and on the certain moment the prices’ close level crossed the line of the moving average instrument, it is a signal for the trend’s end or change of its direction. This is the moment when staying in the market can be very risky and closing the trading position is a better choice.
As already noted above, for a successful usage of the moving average there must be a long increasing or decreasing trend. When the currency rates stay within the price band, the moving average, as a tool that reacts to changes with some delay, does not show useful information to a Singapore trader.