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What is the primary function of a moving average in technical analysis?

To predict future stock prices with certainty

To identify and follow trends in the market

To generate buy and sell signals in a random market

To eliminate all risks associated with trading

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What distinguishes a simple moving average (SMA) from an exponential moving average (EMA)?

SMA considers the volume of trades, while EMA does not

EMA reacts more quickly to recent price changes than SMA

SMA is exclusively used for long-term analysis, while EMA is for short-term

EMA is based on historical data, while SMA relies on future predictions

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How can a moving average be used to generate a trading signal?

When the stock price crosses above the moving average, it may signal a buying opportunity

A moving average guarantees profits regardless of market conditions

Moving averages are effective in predicting market crashes

Trading signals from moving averages should be ignored in favor of fundamental analysis

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What is the purpose of using a moving average crossover system?

To increase the number of trading signals generated

To reduce the impact of market noise and false signals

To predict the exact timing of market reversals

To guarantee successful trades without any losses

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How does the choice of time frame affect a moving average crossover system?

Longer time frames generate more frequent trading signals

Shorter time frames are suitable for long-term investment strategies

Longer time frames are more sensitive to short-term price fluctuations

The choice of time frame depends on the trader's investment horizon and trading style