SMA - Simple Moving Average
Data regarding SMA - Simple Moving Average.
What is SMA?
Simple Moving Average calculates the arithmetic mean of prices over N periods. Each price has equal weight.
SMA = (P1 + P2 + P3 + ... + PN) / N
Common Periods
- 20 SMA: Short-term trend
- 50 SMA: Medium-term trend
- 200 SMA: Long-term trend (institutional benchmark)
SMA vs EMA
| SMA | EMA |
|---|---|
| Equal weight all prices | More weight to recent |
| Smoother, less reactive | Faster, more responsive |
| Better for S/R levels | Better for entries/exits |
| 200 SMA is key level | EMA preferred for trading |
Key Strategies
- Golden Cross: 50 SMA crosses above 200 SMA = bullish
- Death Cross: 50 SMA crosses below 200 SMA = bearish
- Price vs 200 SMA: Above = bull market, Below = bear market