Moving average.

In plain English

A moving average plots the average closing price over a rolling window, say the last 50 or 200 days, and updates each day as new prices arrive. Smoothing out daily noise makes the underlying trend easier to see: a rising average suggests an uptrend, a falling one a downtrend. Traders watch when price crosses an average or when a short-term average crosses a long-term one as possible signals. It is a lagging, backward-looking indicator, though, describing what has happened rather than predicting what will, so it is one input among many, not a reliable forecast.

01Why it matters

Moving averages are among the most-cited chart tools, so understanding that they only smooth past prices, rather than predict, keeps you from treating a crossover as a guarantee.

02The math, step by step

A stock's 50-day moving average crosses above its 200-day average, a pattern some traders call a golden cross. It signals recent strength, but because both averages look backward, it describes the past trend rather than assuring future gains.

03What this is NOT

04Receipts

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