Educational Post:
SIMPLE MOVING AVarage (SMA)
Moving Average (MA)The MA – or ‘simple moving average’ (SMA) – is an indicator used to identify the direction of a current price trend, without the interference of shorter-term price spikes. The MA indicator combines price points of a financial instrument over a specified time frame and divides it by the number of data points to present a single trend line.The data used depends on the length of the MA. For example, a 200-day MA requires 200 days of data. By using the MA indicator, you can study levels of support and resistance,market price trend and see previous price action (the history of the market). This means you can also determine possible future patterns. Buy and sell points over crossovers of smaller and bigger MA's etc