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Simple Moving Average

Simple Moving Average Definition

Simple Moving Average (SMA) is a term coming from statistics widely used in the technical analysis of prices of securities. It is calculated by computing the average price of a security over a specific number of periods.


Additional meaning of Simple Moving Average:

A 10-day SMA is the ten-day sum of prices divided by ten. Old data is always dropped as new prices are available. This causes the average to move along the time scale. Moving averages are trend following indicators, because they do not predict price direction, but rather identify the direction of the trend.








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