Types of Bitcoin Moving Averages

There are 4 types of bitcoin trading moving averages:

1. Simple bitcoin trading moving average
2. Exponential bitcoin trading moving average
3. Smoothed bitcoin trading moving average
4. Linear weighted bitcoin trading moving average

The difference between these 4 bitcoin trading moving averages is the weight assigned in to the most recent btcusd price data.

Simple Moving Average

Bitcoin Simple Moving Average indicator applies equal weight to the bitcoin trading data used to calculate the simple moving average and is calculated by summing up the btcusd price periods of a cryptocurrency chart and this value is then divided by the number of such btcusd price periods. For example bitcoin trading simple moving average 10, adds the btcusd price data for the last 10 btcusd price periods and divides them by 10.

Exponential Moving Average

Bitcoin Exponential Moving Average indicator applies more weight to the most recent btcusd price data and is calculated by assigning the latest btcusd price values more weight based on a percent P, multiplier that is used to multiply and assign more weight to the latest btcusd price data.

Linear Weighted Moving Average

Bitcoin Linear Weighted Moving Average indicator moving averages applies more weight to the most recent btcusd price data and the latest data is of more value than earlier btcusd price data. Linear Weighted bitcoin trading moving average is calculated by multiplying each of the bitcoin trading closing bitcoin prices within the series, by a certain weight coefficient.

Smoothed Moving Average

Bitcoin SMMA Indicator is calculated by applying a smoothing factor of N, the smoothing factor is composed of N smoothing for N btcusd price periods.

The cryptocurrency chart example illustrated below shows Simple Moving Average, Exponential Moving Average and Linear Weighted Moving Average. The SMMA bitcoin trading moving average is not commonly used so it is not shown below.

The Linear Weighted Moving Average cryptocurrency indicator reacts fastest to btcusd price data, followed by the Exponential Moving Average and then the SMA.

SMA, Linear Weighted Moving Average, Exponential Moving Average - Types of Bitcoin Moving Averages - Simple Moving Average, Exponential Moving Average and LWMA

Day Trading Bitcoin with Exponential and Simple Moving Averages

The Simple Moving Average and Exponential Moving Average bitcoin trading moving averages are the most commonly used Moving averages to trade bitcoin. Whereas the Exponential Moving Average bitcoin trading moving average has a more sophisticated method of calculation, its more popular than the Simple Moving Average bitcoin trading moving average.

Simple Moving Average is the arithmetic mean of the closing bitcoin prices in the btcusd price period based on the set time period where each time period is added and then it is divided by the number of time btcusd price periods chosen. If 10 is the btcusd price period used the btcusd price for the last ten btcusd price periods added up then it is divided by 10.

SMA cryptocurrency indicator is the result of a simple arithmetic average. Very simple and some Bitcoin traders tend to associate with the bitcoin trend since it closely follows btcusd price action.

EMA on the other hand uses an acceleration factor and it is more responsive to the cryptocurrency trend.

The Simple Moving Average bitcoin trading moving average is used in cryptocurrency charts to analyze btcusd price action. If the btcusd price action in more than 3 or 4 time btcusd price periods the Simple Moving Average then it's an indication that long cryptocurrency trades should be closed immediately and the bullish momentum of the buy bitcoin trade is waning.

The shorter the Simple Moving Average btcusd price period the faster it is to respond to btcusd price change. Simple Moving Average cryptocurrency indicator can be used to show direct information regarding the bitcoin trend of the btcusd trading market and the strength by looking at its slope, the steeper or more pronounced slope of the Simple Moving Average is, the stronger the Bitcoin trend.

The Exponential Moving Average is also used by many bitcoin traders in the same way but it reacts faster to the btcusd trading market moves and therefore it is more preferred by some cryptocurrency traders.

The Simple Moving Average and Exponential Moving Average can also be used to generate entry and exit points when bitcoin trading. These Moving averages can also be combined with Fibonacci and ADX bitcoin indicators to generate confirmation the cryptocurrency signals generated by these moving averages.