SMA, RSI and MACD in plain words
Indicators are calculations on past prices. They summarise history; they do not know what comes next.
SMA: simple moving average
Add the last 20 closing prices and divide by 20. Do this for each day and join the points to get a smooth line. It shows the recent average direction and ignores small day-to-day noise.
RSI: relative strength index
RSI compares recent gains with recent losses and gives a number from 0 to 100. Many people call values above 70 “fast recent rises” and below 30 “fast recent falls”. These labels describe the past few candles and are not instructions.
MACD
MACD is the difference between a faster and a slower moving average. When the faster one is above the slower one the number is positive, meaning recent prices are higher than the longer-term average.
Related guides
- How to read a candlestick chart
- Why a trading journal helps and what to record
- Position size and risk per trade: the arithmetic
General information for learning. It is not financial, tax, legal or investment advice.