SMMA — Smoothed Moving Average

Overview

The Smoothed Moving Average applies equal weight to all historical data rather than dropping off older values, producing an ultra-smooth line that excels at identifying the dominant long-term trend. SMMA is the smoothing method used inside the ADX and ATR calculations, making it a foundational building block in technical analysis. It is best suited for stock and forex markets where long-term trend clarity is prized over speed.

How It Works

SMMA(1) = SMA(N). For subsequent bars: SMMA = (previous SMMA × (N − 1) + current close) / N. Because the previous average carries forward, the effective lookback is much longer than N periods. A 20-period SMMA behaves similarly to a 39-period EMA.

Key Signals

• Price above SMMA confirms a long-term uptrend; below confirms a downtrend.
• SMMA flattening after a trend signals potential consolidation.
• SMMA crossovers are rare but highly significant when they occur.

Common Mistakes

• Using SMMA for short-term signals — it's far too slow for scalping or day trading.
• Comparing a 50-period SMMA with a 50-period SMA and expecting similar behaviour.
• Not recognising that SMMA lag is by design — it filters noise at the cost of speed.