Simple Moving Average (SMA)

Description

SMA stands for simple moving average. It helps to smooth the price curve for better trend identification. The longer the SMA period selected, the smoother the curve.

Formula

An n–period SMA is simply the sum of the last n period’s closing prices divided by n.

5 period SMA = (Price1 + Price2 + Price3 + Price4 + Price5) / 5