Guide · Markets
What Is a Moving Average?
One of the oldest tools in charting, and still one of the most used — a moving average smooths out the noise so the underlying trend is easier to see.
A moving average takes the average price of an asset over a fixed number of recent periods — say, the last 50 days — and plots it as a single smooth line that updates as each new period closes. Because it's an average, day-to-day noise gets smoothed out, leaving a clearer picture of the broader direction underneath.
The two most common types are the simple moving average (SMA), which weights every period in the window equally, and the exponential moving average (EMA), which weights recent periods more heavily so it reacts faster to new price action. Neither is strictly "better" — an EMA responds quicker but can whipsaw more in choppy conditions, while an SMA is steadier but slower to reflect a genuine change in trend.
Moving averages are used less as a signal on their own and more as a reference line: price trading above a widely-watched moving average is often read as a sign the trend is intact, while a break below it — or a shorter-term average crossing below a longer-term one — is a commonly watched signal that a trend may be turning.
Trade2Spike's charts update in real time, which makes it possible to watch how price actually interacts with a moving average as it happens rather than only studying the relationship after the fact on a static chart.