moving average

Definition

A technical analysis term meaning the average price of a security over a specified time period (the most common being 20, 30, 50, 100 and 200 days), used in order to spot pricing trends by flattening out large fluctuations. This is perhaps the most commonly used variable in technical analysis. Moving average data is used to create charts that show whether a stock's price is trending up or down. They can be used to track daily, weekly, or monthly patterns. Each new day's (or week's or month's) numbers are added to the average and the oldest numbers are dropped; thus, the average "moves" over time. In general, the shorter the time frame used, the more volatile the prices will appear, so, for example, 20 day moving average lines tend to move up and down more than 200 day moving average lines.

Use moving average in a sentence

I had to determine the moving average and that was hard because there were a lot of different things to pay attention to.

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The moving average of the stock was relatively flat, and while it made for an unexciting play to a day trader, it was attractive to those looking for stability.

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I've been watching the moving average price of the Yen in dollars for the last several months, using periods of 30 and 60 days to get a real idea of its value without having to account for the inevitable daily and weekly variations that come with every economic announcement.

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exponential moving average trigger line