A Simple Moving Average (SMA) is a fundamental tool in technical analysis for understanding stock price trends. To calculate it, you sum up the closing prices of a stock over a defined period (commonly 50, 100, or 200 days) and then divide by the number of days in that period. This results in a single data point, which is plotted on a chart. As new data becomes available, the oldest data point is dropped, and the calculation is updated, creating a moving average line.