The simple moving average (SMA) is one of the most popular and simplest indicators.
The SMA averages price data and helps reveal trends. Visually, it is a line.
It reliably tracks the chart and, smoothing out random price fluctuations, it shows the direction in which the asset’s value is moving.
- Change the SMA period to increase the number of signals or increase their accuracy.
- The larger the period, the slower the indicator. It gives more accurate, but fewer signals.
- The smaller the period, the faster the indicator. It gives more signals, but they are less accurate.
- The indicator’s intersection with the price chart and the intersection of several SMAs with different periods give a signal to open a trade.