Simple Moving Average (SMA)
A simple, or arithmetic, moving average that is calculated by adding the closing price of the security for a number of time periods and then dividing this total by the number of time periods. Short-term averages respond quickly to changes in the price of the underlying, while long-term averages are slow to react.
Investopedia Says:
In other words, this is the average stock price over a certain period of time. Keep in mind that equal weighting is given to each daily price. As shown in the chart above, many traders watch for short-term averages to cross above longer-term averages to signal the beginning of an uptrend. As shown by the blue arrows, short-term averages (e.g. 15-period SMA) act as levels of support when the price experiences a pullback. Support levels become stronger and more significant as the number of time periods used in the calculations increases.
Generally, when you hear the term "moving average", it is in reference to a simple moving average. This can be important, especially when comparing to an exponential moving average (EMA). Related Terms:
Arithmetic Mean Average
Exponential Moving Average - EMA
Linearly Weighted Moving Average
Moving Average - MA
Pullback
Speed Resistance Lines
Support
Technical Analysis
Underlying Special Memorandum Account (SMA)
A special account where excess margin generated from a client's margin account is deposited. Also known as "special miscellaneous account". Investopedia Says:
The purpose of an SMA is to lock in any gains realized in a client's margin account. Consider the situation where stock within a client's margin account realizes a capital gain and creates excess margin. If this excess amount is held in the account and the stock position produces a capital loss at a later date, the client would lose his or her gain entirely.
An SMA can also hold interest and dividend payments from long positions and proceeds from closing out a securities position. Clients can use funds in their SMA to purchase additional securities for their margin account. Related Terms:
Credit
Initial Margin
Leverage
Margin
Margin Account
Margin Call |