Simple Moving Average (SMA)
Arithmetic mean of the last n closing prices — the simplest smoothing tool and anchor for countless other indicators.
Formula
SMA = (P₁ + P₂ + … + Pₙ) / n
The Simple Moving Average sums the last n closing prices and divides by n. Each new bar drops the oldest close and adds the newest, so the line steps forward uniformly. Common lengths: 20 (short-term), 50 (medium-term), 200 (long-term trend filter).
Traders use SMAs as dynamic support and resistance, for golden / death cross signals (50 crossing 200), and as the baseline inside Bollinger Bands and other envelopes. SMA gives equal weight to every bar — older data has the same influence as the most recent close.
Related Terms
Bollinger Bands
Volatility envelope drawn 2 standard deviations above and below a 20-period SMA; bands widen in volatile markets and contract during consolidation.
BeginnerExponential Moving Average (EMA)
Moving average that weights recent closes more heavily via an exponential multiplier, reacting faster to price changes than the SMA.
BeginnerIchimoku Cloud
All-in-one Japanese trend system with five lines that define support, resistance, momentum, and trend direction simultaneously.
AdvancedMACD
Trend-following momentum indicator built from the difference between a 12- and 26-period EMA, with a 9-period signal line and histogram.
BeginnerTRIX
Momentum oscillator showing the percent change in a triple-smoothed EMA; the extra smoothing filters minor fluctuations and cycles below the signal period.
IntermediateWeighted Moving Average (WMA)
Moving average that linearly weights recent closes more than older ones — more responsive than SMA but smoother than raw price.
Beginner