What is a moving average?
A moving average is the average price over a fixed number of days — typically 20, 50 or 200 — recalculated every day. It smooths out the daily jumps so the trend becomes visible. If the price is above its average, the trend points up; below, it points down.
The thin line is the price, the thick one is the average — that is the trend.
How it works
Take the last 50 closing prices, add them up, divide by 50. That is today's 50-day average. Tomorrow the oldest price drops out, the newest comes in, and you calculate again. That is why it "moves". The result is a smooth line that follows the price with a little delay — and is not thrown by one wild day.
The three everyone uses
- 20 days — about a month. Shows the short trend.
- 50 days — about a quarter. The medium trend.
- 200 days — about a year. The long trend. Many see the price above the 200-day average as "healthy" and below as "sick".
When the short average crosses above the long one, it is called a golden cross — a classic sign that the trend has turned up. Crossing down is a death cross. The names are dramatic; the signal is not always reliable.
What it cannot do
The average looks backwards. It tells you what the price has done — not what it will do. In a sideways market it gives false signals all the time, because the price crosses the average back and forth. It is best at keeping you from trading on one day's noise — not at predicting.
The typical beginner's mistake
Selling because the price dips below the average for a single day. The price crosses the average all the time in a calm market. A signal that holds for a week is worth a look; one that holds for a day is noise.
How you see it in Kiggo
Kiggo's "Short term" verdict shows in the average fields whether the price is above or below its own average — green above, red below. Tap a field with › and Kiggo explains what it means. Kiggo says it itself: "Red does not mean dangerous — only that the price points down right now."
Related terms
Frequently asked questions
What is the difference between SMA and EMA?
SMA (simple moving average) weights all days equally. EMA (exponential) weights the most recent days highest, so it reacts faster. For seeing the trend, the difference is small for a beginner.
Which average should I look at?
It depends on your time horizon. If you hold stocks for years, the 200-day average is the relevant one. If you look at weeks, 20 or 50 days is more useful. Kiggo uses several and shows them side by side.
Kiggo explains — Kiggo does not advise. We never tell you what to buy or sell, and key figures can only be compared between companies in the same industry. The decision is yours. Last updated 2026-09-07.
Written by Claus Frisch, founder of Kiggo. Not an adviser, not a bank — Kiggo explains, you decide.
