Formula
SMA = (x[t] + x[t-1] + ... + x[t-N+1]) / NHow TraderAI calculates it
TraderAI averages the last 20 closes by default; you can change the length and use another price source such as the high, the low or the typical price. The first value appears once 20 candles exist, and each new candle replaces the oldest one in the window.
Live example
How traders read it
Price above a rising SMA is commonly read as an uptrend, and price below a falling SMA as a downtrend.
Two SMAs of different lengths crossing each other, for example the 50 and the 200, are widely watched as a change in trend.
Longer SMAs react slowly but filter more noise; shorter SMAs react quickly but produce more false turns.
Limitations
- An SMA lags price because old and new prices carry the same weight, and it can move when the oldest price drops out of the window.
- In sideways markets price crosses moving averages often without a lasting trend.
Settings and defaults
| Setting | Default | Allowed range |
|---|---|---|
| Price source | Close | Open, High, Low, Close, High-low average, Typical price, OHLC average |
| Period | 20 | 1 to 500 |
What it plots
Drawn on the price chart, on the same scale as the candles.
| Line | Unit | Drawn as | First value |
|---|---|---|---|
| Value | Price | Line | after 20 candles |
Calculation notes
- Average of the selected price over the period. Starts once a full window exists.
Questions
What is Simple Moving Average?
The Simple Moving Average (SMA) is the plain average of the last N prices. Every price in the window has the same weight, so the line smooths out short-term noise and shows the underlying direction.
How does TraderAI calculate Simple Moving Average?
TraderAI averages the last 20 closes by default; you can change the length and use another price source such as the high, the low or the typical price. The first value appears once 20 candles exist, and each new candle replaces the oldest one in the window.
What are the default settings of Simple Moving Average?
The defaults are Price source: Close, Period: 20. You can change every setting on the live chart.
Can I use Simple Moving Average for free on TraderAI?
Yes. Every indicator in the library can be added to the free live chart. The free plan keeps up to 2 indicators active at the same time; Pro lets you combine more on one chart.
Educational content. Indicators describe past prices; they do not predict future prices and are not investment advice.