A moving average is the average price of a security over the previous Nth-day's closes. For example, a "simple" 9 day moving average is the average of the closing prices for the past 9 days. In calculating the moving average each day, the earliest day is dropped and the latest day is added to the number being averaged.

The moving average is used to observe price changes. The effect of the moving average is to slow down the price movement so that the longer term trend becomes smoother (or less volatile) and therefore more obvious. When the price rises above the moving average, it indicates that investors are becoming bullish on the security. When the prices falls below, it indicates a bearish trend.

The longer the period of the moving average, the smoother the price movement is. A 200-day moving average is commonly used to isolate long-term trends.

There are many variations of the moving average available, such as the moving average of the high prices and the low prices represented in a channel called the Moving Average High/Low channel. There is also the Moving Average Percent Channel. The first argument (X) is the x-day moving average of the closing price and the second argument (Y) is used as (Y/10,000*Price) plotted as a channel around over and under the result of the x-day moving average.

The Exponential Moving Average assigns a weight to the price data as the average is calculated. The more recent the price the heavier the weighting. The oldest price data in the exponential moving average is never removed from the calculation, but its weighting is decreased the further back it gets in the calculations.

As an example, the calculations for a 10 period exponential moving average are as follows.

First, go back to the beginning of trading or back 1 year or anything consistent. The longer the period, the more accurate the result. Add up the closing prices for the first 10 periods and divide by 10. This is the result for the 10th period (there are no results for periods 1 through 9). Then take 9/10 of the 10th period result plus 1/10 of the 11th period close. This is the 11th day result, etc, etc.

The Offset Moving Average is a simple moving average offset by moving the average "x" periods to the right, where "x" is the second argument. The first argument is used to calculate the simple moving average of the price, and the second argument determines the number of offsets to the right, hence shifting the moving average "x" periods to the right. The Exponential Moving Average is the same except it uses the exponential moving average in the calculation.

The Offset MidPoint Average is a simple moving average calculated from the average of the high and low for the period, offset by moving the average "x" periods to the right, where "x" is the second argument.

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