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Simple Moving Average

An indicator attached to the price chart with the main purpose of identifying the trend. It can be applied to different price settings: open, high, low, close, median, typical, and weighted. The formula for a period n is: Simple Moving Average = [Price(n) + Price(n-1) + Price(n-2) + … + Price(1)] / n The period of calculation (i.e., n) can be adjusted, but popular values include 20, 50, 100 and 200. It is computed by summing the close price of a number of candlesticks equal to the period of the moving average and then dividing the total by the same period. The quotient is known as the average. The oldest price is discarded from the calculation and the same formula is applied to the next n prices.

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