Simple Moving Average (SMA)

A simple moving average is the unweighted arithmetic mean of an instrument’s prices over a rolling number of observations in sequence.

As each new observation enters, the oldest leaves, producing a smoothed line whose responsiveness depends on the selected lookback. Traders use SMAs to describe trend, dynamic chart areas, or crossovers between different periods. The calculation lags price and assigns equal weight within the window, so it can react slowly to change and generate whipsaws when price moves sideways in practice.