Simple Moving Average (SMA)

A simple moving average draws one line through price by averaging the last n bars, with every bar in that window counting the same. Short-term noise is taken out, so the direction of the trend is easier to see than on the candles alone. Because no bar is favoured, it is the smoothest and slowest of the common averages at a given length.

SMA describes where price has been on average. It does not measure trend strength, it does not react to a sudden move faster than a fraction of that move, and it does not predict future prices.

• Price above or below the line. Price holding above the SMA is read as context for an uptrend, below it for a downtrend.
• The slope. A rising line means the bars entering the window are higher than the ones leaving it. A flat line means they are roughly equal.
• A fast and a slow SMA crossing. When a shorter average crosses a longer one, the recent window has moved above or below the longer one. That crossing is late by construction, since both lines lag.
• Period length. Shorter follows price more closely and crosses it more often; longer is smoother and later.

These are ways to read the line, not entry signals on their own.

Adjust the period and price source in the indicator settings.

The SMA adds up the chosen price over the last n bars and divides by n:

SMA = (price[0] + price[1] + ... + price[length - 1]) / length

With the default length of 9:
SMA = sum of the last 9 closes / 9

Each bar contributes exactly 1/9 of the result at the default length, so a new bar can move the line by no more than a ninth of its own move. When the next bar arrives, the oldest one drops out of the window entirely. That hard edge is why an SMA can change direction because of a bar leaving the window as much as because of a bar entering it.

The line starts once a full window of bars is available, so the first value appears on the ninth bar with the default length.

• It lags. Every bar in the window counts equally, so old prices hold the line back for the full length of the window.
• The oldest bar matters too. The line can turn when a large bar drops out of the window, even if nothing new happened on the latest bar.
• Sideways markets produce repeated false crossovers. With no trend to follow, price crosses the line again and again.
• It depends on timeframe, period and source. The same indicator gives a different line on 15m than on 1D, or on close against hl2.
• It is not a strategy. On its own it carries no risk management, sizing or exit.

• Exponential Moving Average (EMA). An average that weights recent bars more heavily, so it turns sooner than a simple average.
• Weighted Moving Average (WMA). An average that weights the newest bar most and each older bar a step less, so it turns sooner than a simple average of the same length.
• Smoothed Moving Average (SMMA). Wilder's smoothing as a standalone line, an exponential-style average with a slower decay, started from a plain average.