Moving Average is the first Indicator that you see in the Binomo Indicator list. However, I will be discussing one of the types of Moving average i.e SMA or Simple Moving average. This is one of the easiest concepts and I hope you will enjoy trading with the same.
What is SMA
SMA stands for Simple moving average. It is a technical analysis indicator that you can easily use on Binomo. The calculation of SMA is really simple and easy just as its name. You can calculate the SMA by adding the closing prices of the candles and then dividing by the number of candles in the calculation average.
Suppose, You want to find the SMA of ten candles. You can easily calculate the same by adding the closing of ten candles then dividing it by 10.
The formula for SMA is SMA = S1 + S2 ….Sn / n
Where Sn = The price of an asset at period n.
n = number of periods.
- SMA is one of the part of the Moving average. A SMA can be enhanced as an exponential moving average (EMA) that is more heavily weighed on recent price action.
- A SMA can easily be calculated by adding the closing price of the recent candles and then dividing it by the number of candles.
- Short term averages respond more quickly to the changes in the price than the long term averages.
- The SMA helps in verifying the current trend and whether the trend will continue or will reverse.
Configure SMA 7 and SMA 21 on the Binomo Platform
Naturally, you need to log in to your Binomo account. and click on the indicator button and select moving average from the menu.
Now, select Simple moving average from the menu and change the period to 7 and colour to green for better visibility.
Similarly, do the same for the 21 SMA. change the period to 21 and colour to red.
Make Buy Trade when
When the SMA 7 intersects the SMA 21 from the bottom and later If the SMA 7 is above the SMA 21. It signals a bullish trend and here we can make a buy trade with the 10 min or 15 minutes time frame.
Make Sell Trade when
When the SMA 7 intersects the SMA 21 from the top and continues below the SMA 21. It signals that the market is bearish and here we can make a sell trade with the short time frame.
I have covered everything about SMA in this article and I hope you have found this article helpful. It’s now your turn to check and test your skills on the Binomo demo account You can also use the other indicator like RSI or Stochastic for trade confirmation. Do comment below If you are facing any doubts I would love to hear from you as soon as possible.