In this article we will look at three key indicators used to identify and trade trends: moving averages, stochastics (and RSI) and On Balance Volume (OBV). Moving Averages Moving averages are important indicators used to analyze price movement and trend direction. Moving averages are simply the average of the closing price of a trading security over a given period of time. They are used to understand price action during a specific period of time, in order to identify overall trends. Because they are based on past price action, moving averages are considered lagging indicators. There are two types of moving averages that are generally used by traders and investors: Simple Moving Averages (SMA) Exponential Moving Averages (EMA) SMA is calculated by adding the closing price of a trading security during a specific period of time and then dividing by the number of days of that trading period. For example, when we look at the 21 SMA, we look at the average price of stock d