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What is the Simple Moving Average (SMA)?
The simple moving average is the plain average of the last N prices. Each new bar drops the oldest price and adds the newest, so the line smooths out day-to-day noise and shows the direction of the trend.
SMA = (P₁ + P₂ + … + Pₙ) ÷ N
How to read it
- Price above a rising SMA points to an uptrend. Price below a falling SMA points to a downtrend.
- Short lengths such as 20 react quickly. Long lengths such as 200 show the bigger picture.
- Traders often watch for price crossing its SMA, or a short SMA crossing a longer one.
Common questions
What is the difference between SMA and EMA?
The SMA treats every price in its window equally. The EMA gives more weight to recent prices, so it reacts faster. Use the EMA calculator to compare.
Which length should I use?
There is no best length. 20, 50 and 200 are popular because many traders watch them. Choose one that suits how long you hold trades.
Why might my numbers differ from another platform?
Check that the source (usually Close), length and timeframe match. Small differences also come from the data provider, adjustments for splits, and whether the live candle is included. Turn the live candle off in Settings to use completed bars only.