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What Is 30 day Moving Average

19 Aug 2023

Introduction

Moving average is the technique or method to calculate the estimated price of shares. It is the technical indicator that shows how share prices are moving. The average of the stocks is taken over a specific period, like 10, 20, or 30 days, whichever the trader chooses. 

Do you know how to profit from MA? Read more to learn how to earn high profits using a 30-day moving average. 

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What does 30-day moving average means?

 

  • The 30-day moving average is a short-term indicator that indicates the closing price of a stock over 30 days. 
  • The 30-day moving average of any stock is calculated by adding the last 30 days’ closing price of the stock and dividing it by 30. The resultant value will be the 30-day moving average for that particular stock. 

Why is 30-days moving average beneficial to earn better profits? 

The following are certain benefits that prove why the 30-day moving average helps make huge profits in the stock market. 

  • Easy calculation

The 30-day moving average indicator is one of the easiest methods to calculate the stock's average closing price for the last 30 days. 

  • Market trends

The moving average allows you to find the current market trend in the immediate future. This helps in predicting short-term trends. With this method, you can identify the market trend and plan accordingly to get high profits. 

  • Quick orders

If you don’t have time to monitor the stocks closely, you can opt for this method to place buy or sell orders. Traders check if the stock price is higher than the average price they buy and when it is below the moving average, they sell. This way, investors make informed decisions and takes benefit from huge profits. 

  • Less lag effect

The lag effect describes the stock with a low price, low P/E ratio, and underperforming. The stock qualities The long-term moving average has a more lag effect than the current dynamic price action. 

This is because the long-term moving average considers historical prices for an extended period. But this suits those looking for long-term wealth creation rather than day-to-day trading. At the same time, the short-term moving average does not have any lag effect. 

Key Takeaways

Traders looking for quick profits in the short term can use this 30-day moving average calculation, as it is highly beneficial for short-term trading. Though a simple 30-day moving average help in avoiding the dynamic fluctuation in stock prices, traders must not entirely rely on the moving average technique to enter or exit their position. Moving averages are trend indicators that must be analyzed and strategised before moving. 

 

Related articles - What Is a 7-Day Moving Average How It Helps Traders | What Are The Types Of Moving Average | What Is Moving Average And Formula To Calculate Moving Average | What Is the 200-Day Moving Average and How Does It Work

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