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Chapter 9. Moving Average Trading Channe... > The Basic Ingredients of the Moving ...

The Basic Ingredients of the Moving Average Trading Channel

A moving average reflects the trend of the stock market for the timeframe in which you are operating. There might be definite benefits to maintaining multiple channels that reflect, among them, longer- and shorter-term market periods and trends.

As you know by now, moving averages are tools for smoothing price data that clarify the direction and strength of underlying market trends by removing noise associated with short-term price fluctuations. The longer the term of the moving average is, the longer the trend it will reflect, and the smoother and slower changes will be in direction of the average.


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