How are 200 day moving averages calculated?
When I look at the 200 day moving average for a stock on a two year chart versus a five year chart, they are different. How can that be if the 200 day market average is based upon the stock price for the past 200 days regardless of the chart period?
Moving averages are defined periodically. Although daily is a popular period to track, periods can be defined as seconds, minutes, days, weeks, years, and just about everything between and beyond.
This being the case, depending on the charting software and package utilized, even if something is labeled “200 day moving average” it may be a 200 period moving average. So, when you switch from a two-year chart to a five-year chart, the periods measured may automatically switch to something other than daily to fit the data within the new, longer charting span. If the periods change, then it will alter the measurement of the periodic moving average.
Try using charts where you can control the periods measured, as well as the date ranges and parameters of the moving average (such a chart can be found here). You will find that if the periods are defined as daily, the span of the chart will not affect the 200 period moving average if the end date does not change.
A 200-day moving average should be the same regardless of the time period being viewed, but on the longer period the section of the two-year chart on which it is represented would be only 40% as long as on the five-year chart. With that said, I caution you against placing much value on charts as a tool in successful investing. They're helpful at seeing the past, but virtually useless in providing insight into the future.