Simple Moving Averages
- By FXT
- OCT 19, 2022
It is important to understand how SMAs are calculated so you can better comprehend what’s happening with the price action.
For example, the 5-day SMA is calculated by getting the closing price over the last 5 days, summing it and dividing it by 5. When plotted on a chart, the SMA appears as a line which approximately follows the price action - the shorter the time period of the SMA, the closer it will follow the current price action. The 33-day SMA is calculated the same way.