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StockCram is not a broker-dealer, investment adviser, or financial institution. All content is for educational and informational purposes only and should not be construed as personalized investment advice. Consult a qualified financial professional before making investment decisions. Past performance does not guarantee future results.Simple Definition
The average price over a period (like 50 or 200 days). Used to spot trends.
Why It Matters
Moving averages smooth out daily price noise to show the underlying trend. The 200-day moving average is particularly famous - when a stock drops below it, some traders see it as bearish; when it rises above, bullish. A 'golden cross' (50-day crossing above 200-day) or 'death cross' (50-day crossing below) makes headlines in financial news.
Key Points
- 200-day MA is watched by almost everyone - institutional investors often won't buy stocks below it
- Simple MA weights all days equally; Exponential MA (EMA) gives more weight to recent prices
- MAs work better in trending markets; in choppy, sideways markets they give many false signals
Related Terms
Common Questions
The average price over a period (like 50 or 200 days). Used to spot trends. Moving averages smooth out daily price noise to show the underlying trend. The 200-day moving average is particularly famous - when a stock drops below it, some traders see it as bearish; when it rises above, bullish.
Moving averages smooth out daily price noise to show the underlying trend. The 200-day moving average is particularly famous - when a stock drops below it, some traders see it as bearish; when it rises above, bullish. A 'golden cross' (50-day crossing above 200-day) or 'death cross' (50-day crossing below) makes headlines in financial news.
200-day MA is watched by almost everyone - institutional investors often won't buy stocks below it
Simple MA weights all days equally; Exponential MA (EMA) gives more weight to recent prices
MAs work better in trending markets; in choppy, sideways markets they give many false signals