Deep Dive
Everything You Need to Know
Under the Hood
How It Works
SMA sums up closing prices for a given number of periods and divides by the number of periods. Each data point has equal weight in the calculation.
In Practice
How Traders Use It
SMA is used to identify trend direction and support/resistance levels. The 50-day and 200-day SMAs are watched by institutional traders worldwide.
Highlights
SMA at a Glance
Equal weight for all data points
Common periods: 20, 50, 100, 200
Acts as dynamic support/resistance
50 & 200 day SMAs are key levels
Best for identifying long-term trends
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