Home Featured Simple Moving Average: Definition and Examples

Simple Moving Average: Definition and Examples

Simple Moving Average: Definition and Examples

Traders employ a range of moving averages in their technical analyses to smooth out the price data and identify trend. The simple moving average is the simplest type of moving-average and is therefore regarded as a core technical tool. What is SMA? In this FXOpen Guide, we will explain how to calculate the simple moving average (SMA) and how you can use it to trade.

What is an SMA?

The technical analysis indicator is a simple moving average (SMA), which represents the average price of a particular asset over a certain period. What is the SMA line? The SMA is plotted on a price chart in the form of a line that moves as soon as new price data appears – for instance; it will change every minute on a 1-minute chart and every 4 hours on a 4-hour chart. The line is designed to smooth out price fluctuations to make it easier for traders to identify the market’s direction. The degree of smoothing depends on the MA’s period.

The chart shows how MAs smooth out EURUSD’s pricing. Short-term averages are more responsive to price changes, while long-term ones tend to be slower.

Simple Moving Average (SMA): Definition and Examples

What is SMA in stocks? Simple MAs are used in both forex and commodities ,… to calculate the SMA.

Continue reading…