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trend

Simple Moving Average

The Simple Moving Average is the average closing price over the last N days. It smooths noise to reveal the underlying trend.

Default Params:period=200

What It Measures

Trend. Whether the average price of the last N days is rising or falling, and where price sits relative to that average.

The Math (Simplified)

Add up the last N closing prices and divide by N. Each day, the oldest price drops out and the newest joins in.

Default Inputs & Tuning

200 (long-term trend) and 50 (medium-term trend) are the most common windows. Longer periods react slower but give fewer false signals.

When It Works (Market Edge)

Strong, sustained trends: a price above its 200-day average in an uptrend stays above it for months.

When It Fails

Sideways, ranging markets: price oscillates around the average, so crossing signals fire repeatedly and lose money to whipsaws.

Common Myths

Myth: A price above the 200-day SMA always means the market is safe to buy.

Truth: It only means the recent average is above the older average. In a late-stage rally or a crash, the average lags far behind price.

Myth: Golden crosses predict big gains.

Truth: Golden crosses (SMA 50 crossing above SMA 200) happen often and are already priced in by the time they trigger.

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