The Simple Moving Average is one of the most powerful and popular trading indicators that you can find in almost all trading indicators. You can easily find and set this indicator on the IQ option trading platform. In this article, I will show you how to trade with this indicator and  how you can find the trend using the same.

What is Simple Moving Average?

SMA = ( Sum of price values for n period ) /n

Understanding the Simple moving average is quite a simple job. In Simple Moving Average, you just need to find the average closing price of a security.

For example: Suppose, you want to find the Simple Moving Average of the last 5 candles. Here, n will be 5.

Candle        Closing price

      1                         24

      2                        25

      3                         27

      4                         28

      5                        30

The sum of our values would be :  24 + 25 + 27 + 28 + 30 = 134

Now, SMA or Simple Moving Average = 134   /   5 = 26.80

This is how in the ’90s traders used to calculate moving averages and plot them in the technical chart. fortunately for us, thanks to the advanced technology and the IQ Option, this hard labour mathematics work is automatically done by the IQ option trading platform.

How to configure Simple Moving Average on IQ Option?

To configure the Simple moving average on IQ Option follow the steps below:

Firstly open your IQ option chart. In case, you don’t have one click here.

Now, click the indicator button and search for the Moving average in the popular section.

Now click the name and configure the indicator.

Change the Period of the indicator to 21. you can also change the colour of the indicator line and increase the width of the line.

How to spot trends using Simple Moving Average?

Trading with the Simple moving average is straightforward while using the indicator you need to focus on the intersection of price and the line. when the Simple Moving Average line intersects the price it creates buy and sell signals.

When the price or for simplicity let’s say the candle intersects the line and the candle is below the Simple Moving Average line. It signals an upcoming bearish trend. and we can place a sell trade accordingly.

Vice versa, when the price or for simplicity let’s say the candle intersects the price and is above the Simple Moving average line. It signals an upcoming bullish trend and we can place a buy trade accordingly.

So, this is how you can trade with Simple Moving Average. you can also use a double Simple Moving Average which I am going to cover in my next article, For now, try this trading strategy on the IQ option demo account.