What is Moving Average?

A line plotting the average closing price over N periods — a lagging but honest summary of trend direction.

A moving average (MA) is a line plotted on the chart showing the average closing price over a chosen number of periods — the 50-period MA averages the last 50 closes and updates with each new candle. The simple moving average (SMA) weighs all periods equally, while the exponential moving average (EMA) weighs recent prices more heavily and reacts faster. By smoothing out candle-to-candle noise, the MA makes the underlying direction easier to see: price holding above a rising MA describes an uptrend at a glance.

Every use of a moving average must respect its one defining trait: it lags, because it is built entirely from past prices. It will never call a top or a bottom, and it whipsaws badly in ranges, where price crosses back and forth through it without meaning anything. Its honest jobs are trend filtering (only take longs while price holds above the 200 MA, for example), dynamic support and resistance in a trending market, and objective context for a discretionary read. Traders who ask an MA to generate entries on its own are asking a rear-view mirror for directions.