The average closing price of a stock over a given period is referred to as the Simple Moving Average (SMA). The term "moving average" refers to the fact that the stock price fluctuates frequently, causing the moving average to vary as well. In technical analysis, the SMA is one of the most important indicators.
For longer-term investors, the 50 and 200 moving averages are the most popular. Alternatively, consider the 20 and 50 as short- and medium-term indicators.
In the thinkorswim platform, enter in a stock symbol and then pick Add Study > Moving Averages > Daily SMA from the Charts > Studies menu. The Customization window allows you to choose the time period (20, 50, etc.).
Because EMAs give recent data more weight than older data, they are more responsive to recent price changes than SMAs, which makes EMA returns more timely and explains why the EMA is the favourite average among many traders.
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