Moving Average (MA)
A lagging summary of past data whose signal depends on window, weighting, timeframe, adjustments, and market regime.
A moving average summarizes a sequence of past observations using a selected window and weighting method. Simple, exponential, and other moving averages react differently, and all are derived from historical data rather than forecasts of future prices.
Frequently Asked Questions
Which moving-average period is best?
There is no universally best period. Results depend on timeframe, asset, volatility, objective, transaction costs, and research design. Common periods such as 20, 50, or 200 are conventions, not guarantees.
Do golden crosses and death crosses predict returns?
No. They are lagging crossover rules that can perform differently across samples and regimes. Signals may arrive after large moves and can generate repeated whipsaws.
How do SMA and EMA differ?
SMA gives equal weight to observations in the window, while EMA assigns more weight to recent data under a selected smoothing convention. Faster reaction also increases sensitivity to noise.
What data issues affect moving averages?
Corporate actions, missing sessions, adjusted versus unadjusted prices, intraday sampling, market closures, stale quotes, and survivorship bias can change the result.