What is a moving average?

A moving average (MA) is the average of the closing prices of the last N periods, updated as each new candle arrives — hence "moving". A 20-day average, for example, sums the last 20 closes and divides by 20. On the chart it appears as a smooth curve flowing through the price.

The average's job is to filter noise. Individual candles zigzag; the average smooths those zigzags and summarises the general drift in a single line. There are two common types: the simple moving average (SMA) weighs every day equally, while the exponential moving average (EMA) weighs recent days more heavily and therefore responds to price faster.

Which N is the "correct" one? None. 20, 50 and 200 are common habits, not magic numbers; a short average produces a fast, noisy summary and a long one a slow, calm one. An average gives you no new information — it is a condensed form of the price you can already see; filtered information is easier to read, but filtering always loses something.