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Simple Moving Average (SMA) for simple trading strategy

This short video is explaining how the Simple Moving Average (SMA) could be used in trading.

A simple moving average (SMA) is an arithmetic moving average calculated by adding the closing price of the security for a number of time periods and then dividing this total by the number of time periods.

A simple moving average is customizable in that it can be calculated for a different number of time periods, simply by adding the closing price of the security for a number of time periods and then dividing this total by the number of time periods, which gives the average price of the security over the time period. A simple moving average smoothes out volatility, and makes it easier to view the price trend of a security. If the simple moving average points up, this means that the security’s price is increasing. If it is pointing down it means that the security’s price is decreasing. The longer the timeframe for the moving average, the smoother the simple moving average. A shorter-term moving average is more volatile, but its reading is closer to the source data.

More about indicators based on various Moving Averages you can read here: What is a Moving Average? (+video, 1:44)
More about Simple Moving Average you can read here: Investopedia

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