SMA

Simple Moving Average

Click here read about Moving Averages.

 

Used primarily to indicate direction, whether this be positive or negative. Calculated as the average price of the last n-periods (the period can be changed under "edit"). The results can also be offset, backwards, by the required period (also changed under "edit"). SMA can be used to suggest buy and sell signals.


Parameters: Period & Offset.

For additional help on what the different parameters mean, that isn't included on this page, click here.


Simple Moving Average

Simple Moving Average

Here is an example of a Simple Moving Average chart study (on a London Stock Exchange graph)


Reading the study:

When the SMA crosses from above the current price it may be a good time to buy, when the SMA crosses from below the current price it may be a good time to sell.


In more depth - If there is an established uptrend of the price, and therefore the SMA, then when the stock  is below the SMA, you should buy when the price crosses the SMA from below. The SMA acts as a support/buy indicator. Vice Versa; If there is an established downtrend [of the price and therefore the SMA], then when the stock price falls  below the SMA, you should sell when the price crosses the SMA from above. The SMA acts as a resistance/sell indicator.


SMA Crossings

SMA Crossings

Here is an example of a SMA crossing the price line (of the London Stock Exchange), and what it may indicate


In Addition:

 

If you wish to use more than one SMA, please select Multiple Moving Average.





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