SMA (Simple Moving Average) is one of the most popular indicators used by traders on IQ Option. This indicator helps us to identify the current trend and is really easy to use. In this article, I will teach you How to use SMA20 on the IQ Option trading platform.
How to set SMA20 on IQ Option?
Once you have logged in to your IQ Option account. Click on the indicator button on the left-hand side bottom and select the moving menu.
Now, set the period to 20 and change the colour to light for better visibility. Here, I select the white colour and increase the thickness and click apply to save the settings.
What is SMA?
SMA or Simple moving average is an arithmetic moving average calculated by adding recent price, usually closing price divided by the number of periods in that range. Calculation of moving average is really easy. If you have studied arithmetics you must remember the simple average formula. where we used to calculate the average height of a certain number of classes & more. Just like the same the moving average is calculated. It is moving average because it is plotted on the live chart bar by bar, forming a line that moves along the chart as the average values changes.
How to Trade with SMA20?
Trading with SMA20 is really easy. All you need to look for is from where it touches or cuts the candle. Remember to make short term trades as the SMA20 is for short term traders. You can make 15 min or 20 min buy or sell trades using the indicator.
When to make buy trade
When the price intersects the SMA20 and the price is above the SMA20 then it signals a bullish trend and here we need to make a buy trade.
When to make sell trade
Similarly, when the SMA20 intersects the price and the price is below the indicator. It signals a bearish trend and here we need to make a sell trade.
SMA20 indicator is one of the most popular trading indicators that helps us to identify the current trend and price direction. This indicator is really easy to use and can give you some really good results. However, As, I said earlier no indicator can be 100% perfect Therefore, you can use support and resistance to confirm your order.
When the SMA line intersects near the support level and the price is above the SMA20 it signals a bullish trend and here we need to make a buy trade. Similarly, When the SMA line intersects near the resistance level and the price is below the SMA20 it signals a bearish trend and here we need to make a sell trade.
The best way to analyse and understand any indicator is by practising the same in the IQ Options practice account. You can easily analyse the indicator and see how the indicator behaves. I wish you huge success and a happy trading career ahead.