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Finance Dictionary and Glossary of Investment Terms
Moving Average Envelope
Definition 1.
A trading band (upper and lower lines) plotted on top of a security''s price chart at a specified percentage above and below a selected moving average. Moving averages show the average value of a security''s price over a period of time. The value is calculated by totaling all the previous closing prices over a time period and dividing them by the number of closing prices (bars) included in that time period. Depending upon the number of bars you use to calculate this figure, these lines may be very sharp (7 or 12 day moving average), or very smooth (40 day moving average). When using Investor charts to study moving average envelopes, you can select whatever moving average and deviance percentage (determines how wide the envelope is) works best for your investing strategy. Check this feature out in Investor''s Stock area under the Charts tab on the left navigation bar.
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