SMA

Simple Moving Average

The average price of a security calculated by adding closing prices from the most recent trading days (for example, the last 10 days) and dividing by the number of trading days considered (in this case, 10). A simple moving average is easy to calculate and provides a quick look at a security's short-term trend. See also: Exponential moving average.

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SMA

See special miscellaneous account.

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Simple Moving Average (SMA)

What Does Simple Moving Average (SMA) Mean?

A moving average that is calculated by simply adding the closing price of a security for a number of periods and dividing the total by the number of periods; short-term averages respond quickly to price changes in the underlying securities, whereas long-term averages are slow to react.

Investopedia explains Simple Moving Average (SMA)

Generally, this is the average stock price over a certain period. One should keep in mind that equal weighting is given to each daily price. As shown in the accompanying chart, many traders watch for short-term averages to cross above longer-term averages to signal the beginning of an uptrend. As shown by the arrows, short-term averages (e.g., 15-period SMA) act as levels of support when the price experiences a pullback. Support levels become stronger and more significant as the number of periods used in the calculations increases. The term “moving average” refers to a simple moving average. This is important, especially when one is comparing it with an exponential moving average (EMA).

Related Terms:
• Moving Average—MA
• Resistance
• Support
• Technical Analysis
• Volume