• Skip to primary navigation
  • Skip to content
  • Skip to primary sidebar
  • Skip to footer
Daniels Trading

Trade Futures, Spreads and Options with Confidence.

Top Navigation

  • Open a Futures Account
  • Sign Up
  • Log in
  • 1.800.800.3840

Primary Navigation Menu

  • About
    • Who We Are
    • Services
    • Risk Disclosure
    • COVID-19
  • Trade
    • Broker-Assisted
    • Self-Directed / Online
    • Request Pricing
  • Hedge
    • Ag Marketing Plan
    • WASDE Analysis
    • Grain Resources
    • Livestock / Dairy Resources
    • Request Pricing
  • Invest
    • Automated Strategies
    • Managed Futures
    • Request Pricing
  • Advisories
    • GENERAL / FUNDAMENTAL
      • DT Newsletter
      • Insider Market Advisory
      • Turner’s Take Newsletter & Podcast
    • TECHNICAL ANALYSIS
      • The Cullen Outlook
      • Data Feed Trade
      • Jarboe Trading Journal
      • Trade Spotlight
    • AG MARKETING
      • Cattleman’s Advisory
      • Technical Ag Knowledge
      • Turner’s Take Ag Marketing
    • THIRD-PARTY RESOURCES
      • CFRN
      • Moore Research Center, Inc. (MRCI)
      • OptionWorks®
      • TASMarketProfile.com
  • Education
    • CME Group Resource Center
    • CME Group Offers
    • Small Exchange Resources
    • Guides
    • Frequently Asked Questions
    • Order Entry Handbook
  • Blog
    • Futures 101
    • Ag Marketing
    • Tips & Strategies
    • Trading Advisories
  • Resources
    • Trading Software
    • Quotes and Charts
    • Futures Calendars
    • Contract Specifications
    • Margin Requirements
    • Futures Calculator
  • Accounts
    • Apply
    • Access My Account
    • Funding
  • Contact
Home / Education / Technical Analysis Learning Center / Smoothed Moving Average

Smoothed Moving Average

A Smoothed Moving Average is an Exponential Moving Average, only with a longer period applied. The Smoothed Moving Average gives the recent prices an equal weighting to the historic ones. The calculation does not refer to a fixed period, but rather takes all available data series into account. This is achieved by subtracting yesterday’s Smoothed Moving Average from today’s price. Adding this result to yesterday’s Smoothed Moving Average, results in today’s Moving Average.

Download our free guide, Futures Trading: Technical Analysis for Beginners,  today!

Properties

Period. The number of bars in a chart. If the chart displays daily data, then period denotes days; in weekly charts, the period will stand for weeks, and so on. The application uses a default of 9. However, to smooth the Moving Average, the period specified is lengthened: Period=2*n-1.

Aspect: The Symbol field on which the study will be calculated. Field is set to “Default”, which, when viewing a chart for a specific symbol, is the same as “Close”.

Interpretation

A Smoothed Moving Average is another type of Moving Average. In a Simple Moving Average, the price data have an equal weight in the computation of the average. Also, in a Simple Moving Average, the oldest price data are removed from the Moving Average as a new price is added to the computation. The Smoothed Moving Average uses a longer period to determine the average, assigning a weight to the price data as the average is calculated. Thus, the oldest price data in the Smoothed Moving Average are never removed, but they have only a minimal impact on the Moving Average.

The main use of this study is its smoothing out function. In this way, the Moving Average removes short-term fluctuations and leaves to view the prevailing trend.

Moving Averages work best in trending markets. A buy signal occurs when the short and intermediate term averages cross from below to above the longer term average. Conversely, a sell signal is issued when the short and intermediate term averages cross from above to below the longer term average. You can use the same signals with two Moving Averages, but most market technicians suggest using longer term averages when trading only two Smoothed Moving Averages in a crossover system.

Another trading approach is to use the current price concept. If the current price is above the Smoothed Moving Averages, you buy. Liquidate that position when the current price crosses below either Moving Average. For a short position, sell when the current price is below the Smoothed Moving Average. Liquidate that position when the current price rises above the Smoothed Moving Averages.

As you use Smoothed Moving Averages, do not confuse them with Simple Moving Averages. A Smoothed Moving Average behaves quite differently from a Simple Moving Average. It is a function of the weighting factor or length of the average.

Literature

Murphy, John J. Technical Analysis of the Futures Markets. New York Institute of Finance. Englewood Cliffs, NJ. 1986.

Wilder, J. Welles. New Concepts in Technical Trading Systems. Greensboro, NC: Trend Research, 1978.

Kaufman, P. J. Technical Analysis in Commodities.

Kaufman, Perry J. The New Commodity Trading System and Methods. 1987.

Murphy, John J. The Visual Investor. New York, NY: John Wiley & Sons, Inc. 1996.

Maxwell, J. R. Commodity Futures Trading with Moving Averages. 1976.

Colby, Robert F., Myers, Thomas A. The Encyclopedia of Technical Market Indicators. Dow Jones – Irwin. Homewood, IL. 1988.

Pring, Martin J. Technical Analysis Explained.

Lebeau, Charles, and Lucas, David. Technical Trader’s Guide to Computer Analysis of the Futures Market. Homewood, IL: Business One Irwin. 1991.

Content Source: FutureSource

Read our guide, Futures Trading: Technical Analysis for Beginners

View Other Technical Analysis Studies

  • Bollinger Bands
  • Commodity Channel Index
  • Crack Spread
  • Crush Spread
  • Default
  • Directional Movement Index
  • Envelope
  • Exponential Moving Average
  • Exponential Oscillator
  • High Low Moving Average
  • Highest High / Lowest Low
  • Historic Volatility
  • Keltner Channel
  • Least Squares Linear Regression
  • Line Oscillator
  • Momentum
  • Moving Average
  • Moving Average Convergence Divergence
  • Moving Standard Deviation
  • Open Interest
  • Oscillator
  • Parabolic Stop and Reversal
  • Rate of Change
  • Relative Strength Index
  • Slow Stochastic
  • Smoothed Oscillator
  • Stochastic
  • Variable Moving Average
  • Volume
  • Volume and Open Interest
  • Weighted Close
  • Williams’ %R

Primary Sidebar

Tips & Strategies

blog-header

How to Harness the Power of Moving Average Crossovers

A moving average is one of the most popular technical indicators. Traders frequently use them to discern trends, identify reversals, and locate support and resistance levels. Let’s look at these powerful technical tools and one unique event: the moving average crossover. What Is a Moving Average Crossover? Moving average (MA) is a “calculation used to… Read more.

Advanced Techniques for Futures Trading: Order Carry Over vs. End of Day Cancellation

Technical Analysis of Stocks: Understand the Pros and Cons

In today’s equities marketplace, the technical analysis of stocks is a popular discipline. Each day, millions of market participants use tools, indicators, and price action as primary decision-making mechanisms. Read on to learn more about the advantages and disadvantages of stock market technical analysis. The Technical Analysis of Stocks Technical analysis is the study of… Read more.

Probabilistic Modeling for Trending Markets

Many mathematicians start with the same, single assumption when they commence any probabilistic modeling: the probability of a market moving higher or lower on any given day is 50%. Though this may seem oversimplified…

More Tips & Strategies

  • Will the Russia-Ukraine War Cause a U.S. Recession?
  • What Is the Best Way to Sell Stock Options?
  • What Are the Four Risks of Trading Stock Options?
  • Understanding the Impact That Stock Option Time Decay Has on Stock Options
  • Bearish and Bullish Options Trading Strategies
  • How High Will Crude Oil Prices Go?
Trustpilot

Footer

Site Navigation

  • Frequently Asked Questions
  • About Us
  • Customer Reviews
  • Contact Us
  • Futures Blog
  • Open a Futures Trading Account
  • Media Resources
  • Fund Your Account
  • Legal Notices

Contact Us

StoneX Financial Inc.
Daniels Trading Division
230 South LaSalle Suite 10-500
Chicago, IL 60604
+1.312.706.7600 Local / Int'l
+1.800.800.3840 Toll-Free
+1.312.706.7605 Fax

Connect with Us

Trustpilot
Risk Disclosure
  • Risk Disclosure
  • Privacy Policy
  • California Residents Privacy Notice
  • Terms of Use
  • Back to top