What is a moving average?

How it is worked out

Take the last five closing prices for JPMorgan Chase, up to Nov 6, 2026, add them up and divide by five.

That is a five-day average. Tomorrow the oldest price drops out and a new one comes in, which is why it is called moving. A 200-day average is worked out the same way, with 200 prices.

Short or long

A short average follows the price closely. A long one sits further away and rarely changes direction. Here are the 20 largest US companies since 2000, at the middle of the companies. Crosses a year is how many times the price went over or under the average, and usual distance is how far the price tended to sit from it.

The difference is the price you pay for a smooth line. A 200-day average gets crossed 8 times a year and a 20-day average 30 times. But the long average reacts late, because it still holds prices from long ago. A sudden fall shows at once in the price but only slowly in the line.

Two kinds

The simplest kind gives every day the same weight and is called an SMA, a simple moving average. That is the kind worked out above and in the rest of this course.

An EMA, an exponential moving average, gives newer prices more weight. The line then reacts faster, but it also moves more on passing swings. MACD is built on two of them.

What the line says

The line is only a summary of prices that have already happened. It holds nothing new compared with the price, and it says nothing about what happens next. The most common number is 200 days, which the next lesson covers. When two averages cross each other, it gets names of its own: golden cross and death cross.

More numbers are on the JPMorgan Chase stock page.