Moving Average (SMA & EMA)

A moving average smooths out price data by plotting the average price over a set number of recent periods, making the underlying trend easier to see through short-term noise. A Simple Moving Average (SMA) weights every period in the lookback equally, while an Exponential Moving Average (EMA) weights recent prices more heavily, making it react faster to new price action. Moving averages are the foundation of many other tools and signals — crossovers, MACD, and trend-following strategies are all built directly on top of them.