SMA is a lagging trend indicator. It is used to smooth the price data by eliminating noise and thus identifying trends.
SMA is the simplest form of a moving average. Each output value is the average of the previous n values of the historical data. You can define the value of n, which is also called the time period. In SMA, each value in the time period carries the same weight, and values outside the time period are not included. This makes it less responsive to recent changes compared to previous changes in the data, and is thus useful for smoothing out the prices' data. A consecutive rise in SMA indicates a clear bullish trend, while a consecutive fall indicates a bearish trend. Thus, it is a trend indicator. Also, since it indicates the trend after it has started, it is a lagging indicator.
SMA is widely used in technical analysis. It is also used for calculating other technical indicators, either in combination with itself or other...