Simple Moving Average

A simple moving average (SMA) is the arithmetic mean of an asset's closing prices over a fixed number of periods, plotted as a line that updates with each new candle. Every period in the window counts equally: a 50-day SMA adds the last 50 daily closes and divides by 50. Because it weights old and new data the same, the SMA is smooth and stable but slow to react to sudden price changes.

For example, if Bitcoin's last five daily closes were $60,000, $61,000, $59,000, $62,000, and $63,000, the 5-day SMA would be $61,000. Tomorrow, the oldest close drops out of the window and the newest is added, so the line "moves" with the market.

Traders use SMAs to define trend (price above a rising 200-day SMA is a common definition of an uptrend), as dynamic support and resistance, and in crossover systems such as the golden cross, which compares the 50-day and 200-day SMAs. A common misconception is that a slower indicator is a worse one; the SMA's lag is deliberate, filtering out noise that faster averages react to, which is why longer SMAs are favored for judging major trends rather than timing entries.