Simple Moving Average (SMA)

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Simple Moving Average (SMA)

In order to follow market trends, various trading indicators might be used. One of them might be the Simple Moving Average (SMA). It is a simple line that is calculated by adding closing price of the asset for various time frames and then dividing this figure by the number of time frames used. Therefore, the SMA might be explained as the average stock price over a given period of time and is usually denoted by a blue line on various charts.

Moving Average on USDJPY

Above, is an example of a Simple Moving Average going through the USDJPY pair. As shown by the blue line, it can be seen that it gives an average movement of the pair throughout the chart.
This analysis method is very helpful to traders. The latter might wish to study more about this indicator before using it.