SMA stands for simple moving average. It is an average that is calculated by adding the recent prices and dividing by the number of time periods. The shorter the term, the more quickly the changes of the underlying price will be recorded. Longer term averages are slower.
What does the Moving Average tell you?
The moving average helps you deal with “noise” that can come from short term volatility. By averaging the measures over time, we can find longer term patterns that are not influenced as directly be short term changes.
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