Moving Average (MA)
Also called: MA
A smoothed line of average price over the last N periods — the foundation of most trend indicators.
Definition
A moving average plots the average closing price of the last N candles, updated each new candle. It strips out noise and reveals the underlying trend direction.
Two families dominate: simple (SMA) treats all periods equally, exponential (EMA) weights recent prices more. Slopes, crossovers between MAs, and price-to-MA distance are the three classic trading signals.
Example
On a daily chart, the 200-day SMA is widely watched as the dividing line between long-term bull (price above) and bear (price below) regimes.
Formula
SMA(n) = (P₁ + P₂ + … + Pₙ) / n
FAQs
Which MA period is best?
There's no universal answer. 20/50/200 are conventional, but the right period is the one that fits your time horizon and is tested on your strategy.