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Finance Dictionary and Glossary of Investment Terms
Moving Average
Definition 1.
Frequently used in technical analysis, a Moving Average is an indicator that shows the average value of a security's price over a period of time. When calculating, you need to specify the time span, i.e. 200 days and so forth.
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Definition 2.
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.
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