GlossaryBeginner
Simple Moving Average (SMA)
The unweighted average of an asset's closing price over a fixed number of recent periods.
A Simple Moving Average (SMA) is the unweighted average of an asset's closing price over a fixed number of the most recent periods — for example, a 20-day SMA averages the last 20 daily closes equally, recalculating as each new period replaces the oldest one in the window.
Because every price in the window is weighted equally, an SMA reacts more slowly to recent price changes than moving averages that weight recent data more heavily, such as an EMA. See Kaavon's dedicated Simple Moving Average article for how it's used in practice.
Examples
- A 50-day and 200-day SMA crossing is a commonly watched, long-term trend-change signal.
- An SMA lags more than an EMA of the same length, since it weights an old price from the start of the window exactly as heavily as yesterday's price.