SMA (Simple Moving Average) is sometimes simply referred to as MA, it is the most basic and easiest to understand type of moving average. It is like measuring the average price level with a straight ruler, without fancy weight designs—simple and intuitive! Next, I will explain SMA through formulas, characteristics, advantages and disadvantages, and vivid metaphors.

1. Formula of SMA

Key Point: The price weight of SMA for each day is 'equal', and all prices participate in the calculation with the same weight.

2. Characteristics of SMA


3. Advantages and Disadvantages of SMA

  1. Advantages:

    1. Simple and Intuitive: The calculation formula is basic, without complex weights.

    2. Suitable for conservative investors: Insensitive to short-term fluctuations, avoiding interference from market noise.

    3. Trend Confirmation: In long-term moving averages, the direction of price trends can be seen more clearly.

  2. Disadvantages:

    1. Strong Lag: Due to equal price weights, SMA reacts slowly to recent market changes, especially during sharp price increases or decreases.

    2. Ignores recent influences: Compared to EMA, SMA cannot capture the latest market dynamics, making it unsuitable for short-term trading.

    3. No volume weight: SMA only considers prices, ignoring market signals from trading volume.






📌 Summary: SMA is an introductory moving average for technical analysis. It is simple, intuitive, and suitable for conservative trend followers. If you are a trading novice, it is strongly recommended to start with SMA, familiarize yourself with the basic logic of moving averages, and then try more complex moving averages (such as EMA or VWMA). Feel free to ask me any questions!