Simple Moving Average
A simple moving average is very common way to smooth data on a chart.
The algorithm is simple. Let’s say, for example, that you want to plot the 50 day moving average of a stock. First you need to get historical data. You need at least 50 days more data that you plan to plot. To plot today’s value on the graph, add up the prices for today’s close, yesterday’s close, and every day’s close for the past 50 trading days. Divide the result by 50 and plot this on the graph for today. Then add up yesterday’s close, the previous day’s close, etc., for a total of 50 trading days, and plot that on the graph for yesterday. Continue as needed.
Our service offers numerous types of analysis of stock prices. Many of these are far more complicated than a simple moving average. But we still do some work with simple moving averages because they are so simple to understand and they are so commonly used. Traders are used to simple moving averages.
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