Moving Average (MA)
A fundamental concept in finance is the moving average (MA) of a stock's closing price. This is the average closing price over a specified time period - for example, the 10-day MA is calculated by adding the closing prices of the last 10 days and dividing by 10. The MA is used to determine the trend of a stock - above the MA indicates an uptrend and below indicates a downtrend. The most commonly used MAs are the 50-day and 200-day, with long-term investors focusing on the latter and active traders on the former. It is generally advised to avoid stocks trading below both the 50-day and 200-day MAs.
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