What Are Forex-ratings Moving Averages?
A moving average (MA) is a trend-following indicator that calculates the average price of a currency pair over a specified number of periods. In the context of forex-ratings moving averages, the term refers to the application of MA techniques to rate or assess currency trends, often as part of a broader technical analysis framework known as Fxcess—a systematic approach to evaluating forex market conditions using multiple moving average signals.
According to the Bank for International Settlements (BIS), global over-the-counter foreign exchange markets traded an average of $9.6 trillion per day in April 2025, up 28% from $7.5 trillion in 2022. With such enormous liquidity and volatility, traders rely on tools like moving averages to filter out short-term price noise and focus on the underlying trend.
The Fxcess approach typically combines multiple moving average ratings—for example, aggregating signals from 15 different MAs including Simple and Exponential MAs with periods of 10, 20, 30, 50, 100, and 200, as well as Hull MA (9), VWMA (20), and Ichimoku Cloud components. This multi-layered rating system aims to provide a more robust view of trend strength and direction.
How Moving Averages Work in Forex
A moving average smooths out price data by creating a constantly updated average price. The calculation is straightforward: MA = Sum of prices over period / Number of periods. For example, a 20-day SMA adds up the closing prices of the last 20 days and divides by 20. Each new day, the oldest price drops out and the newest is added, causing the average to “move” forward.
Moving averages are lagging indicators—they follow price rather than lead it. The longer the period, the greater the lag. Despite this, a significant proportion of forex dealers rely on MAs for analysis; one study indicates that 64% of forex dealers use moving averages in their trading.
The Fxcess rating system extends this basic concept by aggregating signals from multiple MAs with different periods and types. Each MA generates a “rating” (bullish, bearish, or neutral) based on the price’s position relative to the MA line and the slope of the MA itself. The overall Fxcess rating is then derived from the consensus of these individual signals.
Types of Moving Averages
Forex traders commonly use three main types of moving averages, each with distinct characteristics.
Simple Moving Average (SMA)
The SMA calculates the arithmetic mean of prices over a specified period, giving equal weight to each data point. It is the most straightforward type and provides a smooth, reliable view of the trend, though it reacts more slowly to recent price changes.
Exponential Moving Average (EMA)
The EMA applies more weight to recent prices, making it more responsive to current market conditions. This makes the EMA faster to signal trend changes than the SMA, though it can also generate more false signals in choppy markets.
Weighted Moving Average (WMA)
The WMA uses a linear weighting scheme that gives more importance to recent prices but in a more evenly distributed manner than the EMA. It offers a middle ground between the stability of the SMA and the sensitivity of the EMA.
Fxcess Multi-MA Ratings
The Fxcess approach combines multiple MA types and periods into a single rating. This typically includes SMAs and EMAs at 10, 20, 30, 50, 100, and 200 periods, plus specialised MAs like the Hull MA (9) and VWMA (20). The consensus rating aims to reduce the impact of any single MA’s false signals.
| Type | Weighting | Responsiveness | Best Used For |
|---|---|---|---|
| SMA | Equal | Slow | Long-term trend identification |
| EMA | Exponential (recent weighted) | Fast | Short-term trading, quick signals |
| WMA | Linear (recent weighted) | Moderate | Balanced approach |
| Fxcess Multi-MA | Aggregated consensus | Variable | Comprehensive trend rating |
Practical Use Cases
Forex-ratings moving averages serve multiple purposes in a trader’s toolkit. Below are the most common applications.
Trend Identification
The primary use of a moving average is to identify the direction of the trend. When prices trade above a rising MA, an uptrend is indicated; when prices trade below a falling MA, a downtrend is signalled. The slope of the MA itself also provides valuable information about momentum.
Crossover Signals
Two of the most widely recognised MA signals are the golden cross and the death cross. A golden cross occurs when a shorter-term MA crosses above a longer-term MA (e.g., the 50-period MA crossing above the 200-period MA), which is considered a major bullish signal. The death cross is the opposite—a shorter-term MA crossing below a longer-term MA—and is viewed as bearish.
Dynamic Support and Resistance
Moving averages often act as dynamic support and resistance levels. In an uptrend, a rising MA can provide support during pullbacks; in a downtrend, a falling MA can act as resistance during rallies. This makes MAs useful for setting stop-loss levels and identifying potential entry points.
Fxcess Rating System
The Fxcess methodology uses a consensus of multiple MA signals to generate an overall rating. For example, if the majority of the 15 MAs in the Fxcess set are bullish, the overall rating is bullish. This approach helps filter out the noise from any single indicator and provides a more balanced view of market conditions.
Suppose the Fxcess system is applied to EUR/USD on a daily chart. The 10-period EMA, 20-period EMA, and 50-period SMA all show price trading above the MA lines with upward slopes. The 100-period and 200-period SMAs are also sloping upward, though price is slightly above them. The Hull MA (9) and VWMA (20) confirm the bullish bias. Of the 15 MAs in the set, 12 are bullish, 2 are neutral, and 1 is bearish. The Fxcess rating is therefore bullish, suggesting that the dominant trend is up.
A trader might use this rating to favour long positions, while also setting a stop-loss below the nearest dynamic support level (e.g., the 20-period EMA) to manage risk.
Evaluation & Decision Criteria
When evaluating forex-ratings moving averages, traders should consider several factors to determine which MAs and settings are most appropriate for their strategy.
Period Selection
The choice of period is critical. Shorter periods (e.g., 10, 20) are more sensitive and generate earlier signals but are prone to whipsaws in volatile markets. Longer periods (e.g., 50, 100, 200) are smoother and more reliable for identifying major trends but produce later signals. The Fxcess system typically uses a range of periods to capture both short-term and long-term trends.
Type Selection
Choose the MA type that aligns with your trading style. SMA is suitable for long-term trend followers who prioritise stability. EMA is preferred by short-term traders who need quicker signals. WMA offers a compromise between the two. The Fxcess approach uses a combination of types to balance sensitivity and stability.
Timeframe Alignment
The MA period should be aligned with your trading timeframe. A day trader might use 10-period and 20-period EMAs on a 15-minute chart, while a swing trader might use 50-period and 200-period SMAs on a daily chart. The Fxcess rating can be applied across multiple timeframes to provide a multi-timeframe perspective.
Broker Platform Evaluation
Before relying on any MA-based strategy, evaluate your broker’s trading platform for the following features:
- Customisable MA periods and types (SMA, EMA, WMA, etc.)
- Ability to overlay multiple MAs on the same chart
- Visual clarity and real-time updating of MA lines
- Integration with other indicators for confirmation
- Regulatory status: check CFTC registration and NFA membership via the NFA BASIC database
Common Misconceptions
⚠ Misconception 1: Moving averages predict the future
Moving averages are lagging indicators that reflect past price data. They do not predict future price movements; they merely smooth out historical data to help identify trends. Always use MAs in conjunction with other forms of analysis.
⚠ Misconception 2: Any MA crossover is a reliable signal
Not all crossovers are created equal. In ranging or choppy markets, crossovers can generate numerous false signals. The Fxcess approach mitigates this by requiring consensus across multiple MAs before generating a rating.
⚠ Misconception 3: Longer periods are always better
While longer-period MAs are smoother and more reliable for identifying major trends, they are also slower to react to trend changes. A balanced approach that combines short, medium, and long-term MAs is generally more effective.
⚠ Misconception 4: MAs work the same in all market conditions
Moving averages perform best in trending markets. In sideways or range-bound markets, they can generate misleading signals. Always assess the broader market context before acting on MA signals.
Risk Controls & Warnings
⚠ RISK WARNING: Forex Trading Is Speculative and Carries Substantial Risk
Trading foreign exchange on margin carries a high level of risk and may not be suitable for all investors. The CFTC has warned that off-exchange forex trading by retail investors is “at best extremely risky, and at worst, outright fraud”. The CFTC and NASAA caution that “get-rich-quick schemes… tend to be frauds”.
The NFA encourages all investors to conduct due diligence before making investment decisions and to educate themselves on how to spot potential scams. Use the NFA BASIC system to research the background of derivatives industry firms and professionals.
Never trade with money you cannot afford to lose. Moving averages and Fxcess ratings are tools, not guarantees. Always use stop-losses, position sizing, and other risk management techniques. This guide does not provide personalised financial, legal, or tax advice. Consult a qualified professional for advice tailored to your circumstances.
Practical Risk Controls
- Use stop-loss orders to limit potential losses on every trade.
- Apply position sizing based on a fixed percentage of your trading capital (e.g., 1–2% risk per trade).
- Combine MA signals with other indicators (e.g., RSI, MACD, volume) for confirmation.
- Avoid trading during high-impact news events when volatility can spike unexpectedly.
- Regularly review and adjust your MA settings based on changing market conditions.
- Verify your broker’s regulatory status with the CFTC and NFA before depositing funds.