Types of Moving Average
The following are the two basic forms of moving averages:
1. Simple Moving Average (SMA)
The simple moving average (SMA) is a straightforward technical indicator that is obtained by summing the recent data points in a given set and dividing the total by the number of time periods. Traders use the SMA indicator to generate signals on when to enter or exit a market. An SMA is backward-looking, as it relies on the past price data for a given period. It can be computed for different types of prices, i.e., high, low, open, and close.
2. Exponential Moving Average (EMA)
The other type of moving average is the exponential moving average (EMA), which gives more weight to the most recent price points to make it more responsive to recent data points. An exponential moving average tends to be more responsive to recent price changes, as compared to the simple moving average which applies equal weight to all price changes in the given period.
How to Calculate Simple Moving Average?
Simple Moving Average calculator uses Moving Average = Average Period/Total Intervals to calculate the Moving Average, Simple Moving Average are usually calculated to identify the direction of a trend. This can be done in a variety of ways, with the most common being simple and weighted moving averages. Moving Average is denoted by M_{avg} symbol.
How to calculate Simple Moving Average using this online calculator? To use this online calculator for Simple Moving Average, enter Average Period (Avg) & Total Intervals (N) and hit the calculate button. Here is how the Simple Moving Average calculation can be explained with given input values -> 20000 = 100000/5.