Technical Analysis

SMA (Simple Moving Average) — Definition & Example

A moving average computed as a straight arithmetic mean of the last N closing prices.

SMA gives equal weight to every price in the window. It's smoother and slower than EMA, providing fewer false signals in trending markets but lagging more during trend changes. Common windows: 50 SMA (medium-term trend), 200 SMA (long-term trend). The 200 SMA is widely watched institutionally — being above or below it shapes how big traders allocate.

Formula

SMA(N) = (Sum of last N closing prices) / N

Example

5-day SMA of closes [100, 102, 101, 103, 104] = (100+102+101+103+104) / 5 = 102. As the next bar closes, the oldest drops out and the newest enters, giving the next SMA value.

EMA (Exponential Moving Average)Moving Average Bollinger Bands

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SMA (Simple Moving Average) — Definition & Example

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