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7 Charting Tools for Spread Betting: A practical guide to making money from spread betting with technical analysis by Malcolm Pryor

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Tool 3 – Moving Averages

Background and construction

Moving averages have been used by analysts for many years. There are several different types of moving average that are popular with traders, and many different combinations of periods used to create them, but the principles of how to use them are much the same whichever type is used. Moving averages can be used in all timescales.

Let’s look at a weekly chart of the FTSE 100 with a 4 period, a 10 period and a 40 period simple moving average on it. I have included commentary on the chart, showing how the combination of the averages moves from downtrend mode to sideways mode to uptrend mode.

Moving averages – FTSE 100

Moving averages, as the name suggests, take an average of a series ...

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