A moving average takes the last N closing prices, adds them up, and divides by N. That's it. The result is a single line on the chart that smooths out the noise of individual price swings and shows you the general direction things are heading.

The most common periods are 20, 50, and 200. A 20-period MA reacts quickly to recent price changes. A 200-period MA barely moves and shows the long-term trend. When a shorter MA crosses above a longer one, traders call that a "golden cross" and take it as a bullish signal. The reverse, a shorter crossing below a longer, is a "death cross."

Practically, if a stock's price is consistently above its 50-day moving average, the trend is up. If it drops below, something may have changed. Moving averages are lagging indicators. They tell you what already happened, not what will happen. But they're one of the most reliable ways to filter out noise and see what the market is actually doing.