Simple Moving Average (SMA)

A simple moving average is the arithmetic mean of the last N closing prices: add the closes, divide by N, and roll the window forward one bar at a time. Every close in the window counts equally, so a 50-day SMA gives the close from 49 days ago the same weight as yesterday's.

Equal weighting is both the appeal and the flaw. The SMA is transparent and hard to misread, but it responds slowly to fresh information, and an old price falling out of the back of the window can move the average even when nothing happened today. The 50-day and 200-day SMAs are the standard trend markers on daily charts, and the 50/200 relationship defines the golden cross and death cross.