Stock Markets Exposed

Stock market game help?

I'm trying this stock market game for school and my teacher told me to look at the charts and pay attention to the 20 MA and 50 ma line and its good when the 20 ma is above the 50 ma. What is the point of the ma lines and why is it good for 20 to be above 50?

Public Comments

1. Moving averages are the average price of the stock for the given time period. So a 20 MA is the average price from the last 20 days, and 50 MA is from the last 50 days. When the MA that is short by time crosses above the long time MA, that indicates a trend reversal. So, if a stock has been trending down from some time, but then you see the short MA cross above the long MA, you can tell that an uptrend may be starting, so the trader can guess whether its time to buy or not before the actual profits are made. It is a short term strategy though for traders. Investors invest in the business behind the stock. Traders try to pick out patterns out of charts to profit from stock price movements. Two very different camps.
2. When the 20 day moving average is above the 50 day moving average it simply means that the price of the stock is trending upward. That's about it. Don't read too much into it.