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Which moving average type is most commonly used by cryptocurrency traders and why?

avatarhrnyoDec 26, 2021 · 3 years ago3 answers

Can you explain which type of moving average is most commonly used by cryptocurrency traders and provide a reason for its popularity?

Which moving average type is most commonly used by cryptocurrency traders and why?

3 answers

  • avatarDec 26, 2021 · 3 years ago
    The most commonly used moving average by cryptocurrency traders is the simple moving average (SMA). This is because the SMA is easy to calculate and understand. It provides a smooth line that represents the average price over a specific period of time. Traders use the SMA to identify trends and potential support and resistance levels. It is a popular choice among both beginner and experienced traders.
  • avatarDec 26, 2021 · 3 years ago
    Cryptocurrency traders often prefer using the exponential moving average (EMA) due to its responsiveness to recent price changes. The EMA gives more weight to the most recent data points, making it more sensitive to short-term price movements. This can be beneficial for traders who want to capture quick price changes and react to market trends in a timely manner.
  • avatarDec 26, 2021 · 3 years ago
    BYDFi, a leading cryptocurrency exchange, has observed that the weighted moving average (WMA) is widely used by traders. The WMA assigns different weights to each data point, giving more importance to recent prices. This type of moving average is favored by traders who want to place more emphasis on recent market movements while still considering historical data. The WMA can provide a balance between the responsiveness of the EMA and the stability of the SMA.