Moving Average Blocks — How they work (Part 1)
MAs blocks tutorial — First part
Moving Averages blocks are now available on Kryll, these blocks comes in many different shapes and form. In this guide we will tackle down these new features.
Moving Averages
As a starter, what’s a moving average ?
A moving average is, as its name implies, a value that is calculated with an average of a moving range. For example, let’s take these values : 5, 6, 7, 8, 9.
These values correspond to the price of a coin day after day. So if we take the third day, the price is 7, if we take the fifth day, the price is 9, etc...
A Moving Average takes a parameter, this parameter will be the number of candles tested, no matter the period (Daily, H4, H1, M15, etc…). So it shows like that : Moving Average(Number of candle).
Now if we want a Moving Average(3) at day 4, we do : (6+7+8)/3 = 7.
So the Moving Average(3) of day 4 is 7. Now if we go to the fifth day, the Moving Average(3) becomes : (7+8+9)/3 = 8. Because this is the principle of a moving average, it takes into account a number of periods based on its parameter. So every day, every hour and every minute, the Moving Average (no matter what its parameter is) changes.
Here’s a chart that explains the above calculations. (Notice how MA is never equal to the price as it’s an average based on a past period).
We will make a more clear and detailed example later.
More Details
However using a simple moving average may cause some issues, especially on a mid-term basis (like a MovingAverage (100)). So many other possibilities came to life. On Kryll we have the possibility to use :
EMA (Exponential Moving Average) : An exponential moving average works like a MA, except that it emphasize on the last candles, in fact the closer the candle is to the current (or tested) date, the more it’s taken into account. This is why it’s called exponential.
SMMA (Smoothed Moving Average) : The Smoothed Moving Average is a kind of exponential MA that takes into account every period. It is one of the slowest Moving Average, and is not recommended as an indicator to buy or sell, but more like a complement to other indicators.
WMA (Weighted Moving Average) : A weighted Moving Average is just like an EMA except that the oldest datas are not taken into account.(whereas old datas in an EMA just have a very small multiplier)
MA(Moving Average) : Already discussed in the above section.
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