A moving average is a popular technical analysis tool used to reflect trends in the stock market and individual equities. Option traders use moving averages to determine which direction an equity’s ...

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Moving averages smooth out stock price fluctuations to clarify trends. Simple and exponential are the main types of moving averages. These tools help determine optimal stock buying or selling times.

Moving averages are calculated by combining price points of an instrument over a specified time frame and dividing by the number of data points to obtain a single trend line.