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SMA
(Simple Moving Average)
SMA (Simple Moving Average) calculates the average price of a security over a specified period, giving equal weight to all prices. A 50-day SMA sums the last 50 closing prices and divides by 50, updating daily.
SMAs help smooth price data to identify trends - prices above the SMA suggest an uptrend, below indicate downtrend. Crossovers of short-term (e.g., 50-day) and long-term (e.g., 200-day) SMAs generate trading signals. While simpler than EMA, SMAs are more lagging. The 200-day SMA is particularly significant in technical analysis, often called the "golden cross" when the 50-day crosses above it, or "death cross" when below.
SMAs help smooth price data to identify trends - prices above the SMA suggest an uptrend, below indicate downtrend. Crossovers of short-term (e.g., 50-day) and long-term (e.g., 200-day) SMAs generate trading signals. While simpler than EMA, SMAs are more lagging. The 200-day SMA is particularly significant in technical analysis, often called the "golden cross" when the 50-day crosses above it, or "death cross" when below.