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Calculate Moving Average  When to avoid MA  Trading With MA

Learn How To Calculate Simple Moving Average


How is Simple Moving Average(SMA) calculated?

Moving average is calculated on the latest price of the stock while we drop the earlier prices from the series and taking average of the them so that we can plot them in the chart.

Moving average can be calculated on series of opening price, closing price, high price or low price of a stock.

Formula for Simple Moving Average
Simple Moving Average = (P1+P2+P5+P5+P4 ............Pn)/n
where P1,P2............Pn are stock price and n is number of days.

Example Showing Calculation For Simple Moving Averages. Suppose we want to calculate the moving average of a closing stock price. Let the stock price of particular stock X at the end of the months from January to May are 120 Rs,140 Rs,160 Rs,180 Rs and 200 Rs respectively. The three month moving average in April will be (140 Rs + 160 Rs + 180 Rs)/5 or 160 Rs.That is sum of last three months closing including April divided by three.

Our website provides free Stock screening based on Moving Average(SMA/EMA) support, resistance, crossover. It can be found at: Stock Screening based on SMA/EMA Support/Resistance and Crossovers

For Example below table calculating the four day moving average for Reliance Industries Ltd. from 19th April 2010 to 5rd May 2010 (closed price)

Date High Low Open Close 4 Day Moving Average
05/05/2010 1052.6 1018.1 1026.0 1025.75 1027.41
50/04/2010 1047.2 1050.0 1040.0 1055.6 1056.78
29/04/2010 1059.9 1019.15 1024.0 1055.05 1046.2
28/04/2010 1055.95 1012.0 1055.95 1017.25 1059.48
27/04/2010 1068.0 1055.0 1065.0 1061.25 1074.11
26/04/2010 1097.8 1065.5 1080.0 1071.25 1072.52
25/04/2010 1096.0 1080.0 1080.0 1088.2 1070.51
22/04/2010 1095.9 1050.05 1050.5 1075.75 1065.71
21/04/2010 1075.7 1048.15 1070.0 1054.1 N/A
20/04/2010 1079.75 1054.55 1069.85 1065.2 N/A
19/04/2010 1079.8 1051.0 1079.8 1061.8 N/A
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