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Simple Moving Average (SMA)

The calculation of the SMA (Simple Moving Average) goes the following way: the currency closing prices taken for some period of time are summed and divided by the amount of these periods. Generally, SMA represents the average price of the certain period.

The volatility of the forex market is much more smoothed at the long periods of time due to the equal weight given for the daily price by SMA. Only the long-term trends bay me seen out of the long-term averages as far as any insignificant fluctuations get smoothed. For finding put short-term trends the short-term averages are taken, however they still give the long-term expense.

The prices are mostly located close to the moving average but still aside from it. The moving average changes following the trend changes giving the additional data of the trend strength taking the slope steepness as its basis.

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