SMA (Simple Moving Average)Back to Glossary
Simple moving averages are technical indicators used by chartists to determine trends and to see where the current price action fits into these trends. A simple moving average is calculated by averaging out the closing price of a set number of previous periods and then plotting these as a trendline over the chart. So, for example, a 20-day moving average takes an average of the closing prices of the past 20 days. Simple moving averages are not weighted in any way, meaning that all 20 periods in the previous example are given equal weight. Exponential moving averages (EMAs), in contrast, give more weight to recent periods over older ones.
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