What is moving average

Moving average are the workhorses of technical analysis. Most traders start out in technical analysis with moving average, and some traders never see a need to look into any other technique. That's how successful moving averages can make your trading.

A moving average is an arithmetic method of smoothing price numbers so that you can see and measure a trend. A straight line is a good visual organizing device, but a dynamic line, the moving average, more accurately describes what's really going on. In addition, you don't need to choose starting and ending points, removing that aspect of subjectivity, although choosing how many periods to put in your moving averages is subjective. In this book, it will discuss several different ways you can calculate and use moving averages to get buy/sell trading signals.

Be careful not to attribute to forecasting capability to the moving average. Moving averages are trend-following. The moving average is lagging indicator as it can still be rising after your price hits a brick wall and crashes.

Source: Technical Analysis For Dummies, by Rockefeller, & Barbara
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What is moving average