Moving Averages: SMA vs EMA

A moving average smooths out price by plotting the average price over a set number of periods, updating as new candles form. It's one of the simplest ways to see the underlying trend without the noise of every individual candle.

A Simple Moving Average (SMA) weighs every period in its lookback equally. An Exponential Moving Average (EMA) weighs recent periods more heavily, so it reacts faster to new price action — at the cost of being a bit more prone to false signals in choppy markets.

A common technique is watching for crossovers — for example, when a faster-moving average crosses above a slower one, some traders treat that as an early signal of a potential trend change. Like any single indicator, it's rarely used in isolation.