Moving averages are technical indicators traders can use to track stock price levels over time. The basic idea is that looking at how a stock's average price has changed over a specific number of days can show you if it has been trending higher, lower or just moving sideways. You can also use moving averages to identify support and resistance levels to support other trading strategies.
Two common moving averages are simple moving averages (SMA) and exponential moving averages (EMA). Each has its strengths and weaknesses. Which one you use for a given trade will depend on your strategy. On this episode of Trading Up-Close, Lee Bohl takes a closer look at the differences between the two.
Trading Up-Close: SMA vs EMA
The information provided here is for general informational purposes only and should not be considered an individualized recommendation or personalized investment advice. The investment strategies mentioned here may not be suitable for everyone. Each investor needs to review an investment strategy for his or her own particular situation before making any investment decision.
Schwab does not recommend the use of technical analysis as a sole means of investment research.
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