Utilizing Moving Averages

When it comes to technical analysis, it doesn't get much easier than drawing a trendline. But what if you're in need of a slightly more complex indicator? The next step up from drawing trendlines is calculating moving averages. Put simply, a moving average is the average of the closing prices of a stock over a certain period of time. You can compare a closing price with a moving average to help you determine a trend.

Like most technical indicators, there are several different types of moving averages, and I explain a few in this section. First, though, it's important that you understand how to make good choices about the time frames you use when calculating your moving averages.

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