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Simple Moving Averages
Updated over 10 months ago

It is important to understand how SMAs are calculated so you can better comprehend what’s happening with the price action.

For example, the 5-day SMA is calculated by getting the closing price over the last 5 days, summing it and dividing it by 5. When plotted on a chart, the SMA appears as a line which approximately follows the price action - the shorter the time period of the SMA, the closer it will follow the current price action. The 33-day SMA is calculated the same way.

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