GlossarySMA 20
SMA 20
The SMA 20 is the simple average of the chart's last 20 closes. It shows the short-term trend and is the middle line of the Bollinger Bands.
Calculation
Each of the 20 candles counts equally, 5% each. The line begins only at the 20th candle. It is calculated on the chart's candles: over 20 hours on the 1H chart, over 20 days on the daily chart, so about one trading month for stocks. The current candle counts with its current price.
What it is used for
- As a short-term trend line: a price above a rising SMA 20 means a short-term uptrend.
- As the middle line of the Bollinger Bands, which by default are calculated on exactly this SMA 20. The distance of the price from the SMA 20 shows how far it has moved from the mean in the short term.
- As a pullback level in trends, similar to the EMA 20, only a bit slower.
The SMA 20 also changes when an old candle drops out of the window. An outlier 20 candles ago can therefore move the line even though the current price is calm.
Settings
| Setting | Default | Effect |
|---|---|---|
| Length | 20 | 1–500 candles. The menu name stays the same; the line label shows the new length. |
Tip For an SMA on a fixed timeframe, such as 20 days on the hourly chart, use the Simple Moving Average (SMA) and its Timeframe setting.