Moving average is used for smoothing data, price or raw indicator values. The higher the period, the smoother the data is. Smoothing data will filter out small bad whipsaws, but it will also give you late signals. It simply means that if you set period = 2, then you'll get 2 bars late signal. If 1 bar = 1 hour, then it means the signal will come 2 hours late. That's the bad effect of ma.
Choosing the right type of moving average is crucial, because moving average is the mother of most indicators including MACD, CCI, DMI, BBands, and so on. Simple moving average (SMA) is the simplest in calculation but also the lowest quality. Exponential moving average (EMA) and Linear-Weight MA (WMA or LWMA) are more complicated but provides higher equality. Personally I like Jurik's moving average (JMA). Althought the calculation is most complicated, the quality is superb! JMA can smooth out bad whipsaws while also keep the lagging minimum.
I realise that MA is the key to unlock the door of making virtually unlimited money in forex, so I indulge most of the time in researching more about MA and deriving sub indicators.