Moving Averages
Moving Averagesdraws on the price
A smoothed line through the closes. Eight types, from the classic SMA to the fast-turning TEMA — the difference between them only shows up when the trend changes.
On this chart: Any type, any length — add as many lines as you want, each with its own color and thickness.
What it measures
Every moving average answers the same question — where has price been, on average, over the last N bars — and each type answers it with a different weighting. The SMA weighs every bar equally. The EMA weighs recent bars more, so it turns sooner. The WMA sits between them. The VWMA weighs by volume, so heavily-traded bars count for more. Wilder's SMMA (the average inside RSI and ATR) is much slower than an EMA of the same length. The HMA, DEMA and TEMA are engineered to cut lag, each more aggressively than the last.
On a calm, steadily trending chart, most of these land in nearly the same place. They separate when the trend changes — that is the entire reason to pick one type over another.
How to read it
Price above a rising average describes an uptrend at that average's horizon; below a falling one, a downtrend. The 50-day and 200-day SMAs matter partly because so many desks watch exactly those two lines — a level a lot of people watch tends to behave like a level.
Crossovers between a faster and slower average mark momentum shifts, with the standing caveat that a faster average also whipsaws more in sideways tape.
Using it on the wheel
Premium sellers most often use a long average as a quality line: a stock holding above its 200-day is behaving differently from one below it, and the screener's trend factors read the same distinction. A put strike below a rising 50-day sits behind a level buyers have recently defended — that is a description of where the strike sits, not a promise it holds.
Faster types (HMA, TEMA) show up more in exit timing than entry, because they turn earliest — and are also the first to be faked out sideways.
Like everything in this guide, these are descriptions of conditions and reference levels — context for your own decisions, not instructions to trade.