**Description**

The Simple Moving Average (SMA) smoothes price data. It does so by computing the average price over a specified number of periods using a price metric (e.g. the close price or open price) for each period.

It is called a moving average because as time goes on, the SMA drops old data points and accounts for new ones, thus moving through the time range.

**Example**

For example, a 3-day moving average takes the close price for each day, sums them up, and divides by 3. The moving average moves as time goes on.

In this example:

- Number of Periods = 3
- Time Resolution = 1 day

Let’s say we have the past 5 days of ETH/USD close price data: {100, 110, 90, 105, 120}

First day of 3-day SMA: (100+110+90) / 3 = 100

Second day of 3-day SMA: (110+90+105) / 3 = 101.67

Third day of 3-day SMA: (90+105+120) / 3 = 105

Note that as every day goes on, the SMA drops the oldest time period and accounts for a newer one.

**Graph**

**Formula**