What is Simple Moving Average?

A simple moving average is formed by calculating the average price of a stock over a specific number of periods( minute, hour, day etc). Most moving averages are based on closing prices.

Daily Closing Prices: 11,12,13,14,15,16,17 First day of 5-day Simple Moving Avg: (11 + 12 + 13 + 14 + 15) / 5 = 13 Second day of 5-day Simple Moving Avg: (12 + 13 + 14 + 15 + 16) / 5 = 14 Third day of 5-day Simple Moving Avg: (13 + 14 + 15 + 16 + 17) / 5 = 1