Simple Moving Average
a.k.a. SMA
The plain average of the last so-many closing prices, giving every price equal weight.
In plain English
The plain average of the last so-many closing prices, giving every price equal weight.
A simple moving average (SMA) is the most basic moving average. Add up the last N closing prices and divide by N. A 20-period SMA averages the last 20 candles, all treated equally.
It is smooth and easy to understand, but slow to react, because a price from 19 candles ago counts as much as today's. The 50- and 200-day SMAs are among the most watched lines on any chart; when the 50 crosses above the 200, people call it a golden cross.
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