What is a moving average in trading?

A moving average smooths price data by averaging the last N closing prices, making the underlying trend easier to see. As each new price comes in, the oldest price drops out — the average 'moves' forward in time.

What is the difference between SMA and EMA?

An SMA (Simple Moving Average) gives every price in the window equal weight. An EMA (Exponential Moving Average) weights recent prices more heavily by applying a multiplier of 2 / (period + 1). EMAs react faster to new price action, while SMAs are smoother and lag more.

What is the best moving average for day trading?

Day traders typically use shorter, faster averages — the 9-period EMA, 20-period EMA, and the 50-period SMA on intraday charts are the most popular. The best average depends on the timeframe and asset; what matters most is that you apply it consistently.

What is a golden cross?

A golden cross occurs when a short-term moving average (commonly the 50-day SMA) crosses above a long-term moving average (commonly the 200-day SMA). It is widely interpreted as a bullish long-term signal.

What is a death cross?

A death cross is the opposite of a golden cross — the 50-day SMA crosses below the 200-day SMA. It is treated as a bearish long-term signal, though both signals can produce false positives in choppy markets.

How many prices do I need to calculate a moving average?

You need at least N prices for an N-period moving average. For example, a 20-day SMA needs 20 closing prices, and a 50-day SMA needs 50 closing prices.