Moving average
The average price over the last few days, recalculated every day, so the line moves along with the price.
In plain English
Take the closing prices of the last 50 days, add them up and divide by 50. Tomorrow, drop the oldest day and add the newest one. Draw that number every day and you get a smooth line: the 50-day moving average.
A simple moving average (SMA) treats every day equally. An exponential moving average (EMA) gives recent days more weight, so it reacts faster.
Uncle Gary explains
Uncle Gary's weight is a moving average. Nobody cares what he weighed after one Thanksgiving dinner, so the family tracks his 30-day average. The simple version counts last month's salad week as much as yesterday's ribs. The exponential version mostly remembers the ribs.
Why it matters for your money
Moving averages smooth out the noise, which helps you see a trend. But they are always late by design: they only describe what already happened.
Where we tested it
Related terms
All glossary terms. Educational content, not financial advice.