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A Simple Moving Average or SMA is one of the family members of moving averages. If you studied mathematics you must have heard about the term moving averages. The concept of the SMA indicator is almost the same as what you have studied in your school. In this article, I will cover everything about Simple Moving Averages and how to trade with Simple Moving Average on Expert Option.
What is the Simple Moving Average?
Simple Moving Average = A1 + A2 + ……. An / n
Where, A1 + A2 + ……. An [ closing price of the security]
n = Number of security prices
As said above, the Simple Moving Average is one of the family members of the moving averages. The calculation of SMA is relatively easy and isn’t as tough as other moving averages like EMA and WMA. In trading, you can easily calculate the SMA by adding the security closing price and then dividing it by the number of security prices.
Suppose, you want to calculate the Simple Moving Average of the last 10 candles in Bitcoin. Here, you need to add the last ten closing price of the Bitcoin and divide it by the number of security prices.
How to configure SMA on the Expert Option?
Firstly, you need to have an Expert Option account in case, you don’t have one click here. If you are an existing user of the Expert Option log in to your account. After that, you can witness the dashboard of the Expert Option. Click on the indicator button which is on the left side of the screen.
As you click the indicator button a dialogue box will open. then you can see the moving average button which is the third last button of the dialogue box.
After you hit on the moving average button you will witness another dialogue box that allows you to set the SMA indicator according to your requirement. Once you have configured the indicator properly lastly click on apply.
How to trade with SMA indicator on the Expert Option?
Trading with SMA Indicator on the Expert Option is very easy while trading with SMA Indicator you need to focus on the intersection of the indicator line with the price when they intersect each other they generate buy and sell signals.
When the indicator intersects the price from the button and later stays above the price is an indicator of the bullish trend and here we can place a buy trade here and vice versa when the indicator line intersects the price from the top and later stay below the line is an indication of a bearish trend and here we can place a sell trade.
Trading with solo SMA is never a good idea and is not advisable by experts. therefore, you should combine SMA with the indicators like RSI or Support and Resistance.
When you have identified the bullish trend using SMA indicator plus the price is near the support level it indicates the market is at an up trend and vice-versa when the price is near the resistance level place a sell trade.
Well, I hope your concept is clear as I have told you what is SMA in detail, and explained the process step by step. I predict that when you start treading you will perform excellently well, good luck with your trending journey ahead.