Simple Moving Average | Technical Indicators Strategies in Python

Course on Technical Indicators Strategies in Python: https://bit.ly/3D3eGs2 Welcome to this video on simple moving average. After completing this video, you will be able to explain the moving average as well as the simple moving average, or the SMA. You will learn how weights are assigned to each data point while calculating SMA. You'll also be able to list the applications of the simple moving averages. What is a moving average? A moving average is also called a rolling average. It's simply the average of the specified data points over a selected period of time. For example, a 5-moving average represents the average of five data points. And a 10-moving average represents the average of ten data points. This is the daily price data of stock A for the past 5 days. Can you guess the 5-moving average on the fifth day? It would simply be the average of all the prices during the past 5 days. Now we have the price data for the past 6 days, what would be the 5-MA in this case? As the new data for the 6th day has become available to us, we will drop the oldest value, that is, the price as on 1st Jan, and add the latest value, that is, the price as on 6th Jan. So, in essence, the mean or average is rolling along with the data, and hence the name moving average. The reason for using a rolling window to compute the moving average is that unlike the regular average, which only considers stagnant data the moving average takes into account the most recently available data and replaces it w