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Published On: Wed, Feb 6th, 2013

Moving Average

A Moving Average is a measure of historical averages that uses a rolling calculation.

In the case of the 200 day Moving Average, the prices of a security for the past 200 trading days are averaged.  This average price is then plotted on the Trader’s Technical Chart. The next trading day, the oldest trading day price is dropped from the numbers that are used in the Moving Average calculation, and the previous day’s number is included.  The result is a new 200 days that are then averaged to a price, which is then plotted on the Trader’s Technical Chart.  This is done with historical data, leaving a plotted line of Average prices for the past 200 days, or a 200 Day Moving Average.

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About the Author

- Marcus Holland has been trading the financial markets since 2007 with a particular focus on soft commodities. He graduated in 2004 from the University of Plymouth with a BA (Hons) in Business and Finance.

 

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