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What is the Daily Moving Average (DMA)?
In Indian markets, a DMA is a simple moving average worked out on daily closing prices. The 20, 50, 100 and 200 DMA are the ones traders and analysts mention most often.
N DMA = (sum of the last N daily closes) ÷ N
How to read it
- The 20 DMA shows the short-term trend, the 50 DMA the medium-term trend, and the 200 DMA the long-term trend.
- A stock trading above its 200 DMA is generally seen as being in a long-term uptrend.
- A golden cross is when the 50 DMA moves above the 200 DMA. A death cross is the reverse. Both are lagging signals, since they appear after the price has already moved.
Common questions
Is a DMA the same as an SMA?
The maths is the same. DMA is the name Indian traders commonly use for an SMA on the daily timeframe. A few platforms use "DMA" for a displaced moving average, which is a different indicator. Here it always means the daily average.
Why does the 200 DMA show a dash?
It needs 200 daily bars. Choose a history of one year or more so enough bars load.
Can I add my own lengths?
Yes. Use the Other lengths box in Settings, for example 21 or 89.