An average of the past, drawn on the present
A simple moving average (SMA) is the mean of the last N closes. An exponential moving average (EMA) weights recent closes more heavily, so it turns sooner.
That is the entire calculation. It contains no information price does not already have — it contains *less*, because averaging discards detail deliberately. That is its purpose: to remove noise so a direction is visible.
Understanding it as noise removal, rather than as a signal generator, is what makes it useful.
The lag is arithmetic
A 50-period MA cannot turn until enough new closes have entered the average to move it. Shortening the period reduces lag and increases false signals in exactly equal measure.
There is no setting that removes the trade-off, because the trade-off *is* the calculation. Anyone offering an optimised period has fitted historical noise, not found an edge.
The three honest uses
1. Trend filter. "Only take longs while price is above the 200 EMA." Crude, and effective — it removes half your ideas without your having to decide which half.