Moving Averages: Time Frames

Moving Averages can be calculated over any time frame; 50, 100, and 200 periods are most common. A single "period" may refer to a day, an hour, even a minute, depending on the trader's desired time frame. Shorter time frames respond more quickly to the changing price, while more long-term time frames are slower to respond. In addition, Moving Averages can be used in various numbers of bars.

Example:

  • A 20 period Moving Average on the 5 minute chart is simply the average closing price of the last twenty, 5-minute bars.
  • A 20 period Moving Average on the daily chart gives you the average closing price of the last 20 daily bars.

On the following hourly chart, there are two Moving Averages plotted: a 10-period and a 50-period Moving Average.


a 10-period and a 50-period Moving Average

The behaviors of the two Moving Averages differ because of the number of periods used. The higher the number periods used, the slower the Moving Average is to react to price movement. The 50-period Moving Average is ideal for traders to see a long-term price trend, while the 10-period M.A. better reflects the behavior of a short-term trend.