Simple Moving Average (SMA)
Arithmetic mean of the last n closing prices — the simplest smoothing tool and anchor for countless other indicators.
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.