A simple moving average (SMA) is simply an arithmetic moving average calculated by adding closing prices. The average obtained is then divided by the number of time periods in the calculation average.

To simplify your understanding, SME is the mean or say the average of the stock price value over the particular period.

If you want to know about the price of an asset that whether it will continue or reverse to bull or bear trend. SMA here works as a technical indicator. It determines the leading trend direction.

If you see SMA is moving up it means the trend is up and vice versa. SMA is a mathematical concept in the book of the stock market.

Formula to calculate SMA is: