# Smoothed Moving Average (SMMA)

> Smoothed Moving Average (SMMA) is a trend indicator that applies equal weight to all historical price data, producing a smoother signal line than EMA.

**Smoothed Moving Average (SMMA)** is a type of moving average that incorporates the entire price history, giving equal weight to both recent and older data. Unlike EMA, SMMA reacts more slowly to price changes, forming a more stable trend line with fewer false signals.

## Identifying the Trend with SMMA

The SMMA indicator is highlighted depending on whether the current price is above or below the line:

- **Price above the SMMA line** → buy signal (long).
- **Price below the SMMA line** → sell signal (short).

🔵 Thanks to its smoothing effect, SMMA works well on medium and higher timeframes by filtering out short-term noise. However, this same property causes greater lag during sharp market reversals compared to EMA.

## SMMA and Price Crossover

When the current price crosses the SMMA line, it may signal a change in the local trend:

- **Crossover from above to below** → signal to open a short trade.
- **Crossover from below to above** → signal to open a long trade.

Due to SMMA's inertia, such crossovers occur less frequently than with EMA — this reduces the number of trades but improves their quality in trending markets.

## Calculation Formula

SMMA is calculated in two steps:

1. For the first `Length` candles, a **Simple Moving Average (SMA)** is calculated — this becomes the initial indicator value.
2. For each subsequent candle, the following formula is applied:

> **SMMA(t) = (SMMA(t−1) × (Length − 1) + Close) / Length**

Where `SMMA(t−1)` is the value from the previous candle, `Length` is the chosen period, and `Close` is the current candle's closing price.

:::note[Note]
SMMA is a special case of EMA with a smoothing coefficient of `α = 1 / Length`. The larger the period, the smoother the line — and the greater the lag.
:::

## Timeframes and Practical Use

- On **shorter timeframes**, SMMA's lag becomes more pronounced — signals may arrive too late to be useful.
- On **higher timeframes** (4h, 1d), SMMA generates reliable trend signals with minimal noise.

👉 SMMA is most effective in trending markets. In sideways (ranging) conditions, it — like all trend indicators — generates frequent false signals. Always validate your strategy through backtesting.

## Use in Veles Bots (Flexible Indicators)

Available settings:

- **Period** — number of candles used for calculation. Range: 2–500, default value — 7.
- **Interval** — candle timeframe.
- **Method** — calculation type. By bar close (on the selected interval only), or by minute (every minute for any interval).
- **Shift** — offsets the requested indicator value by a specified number of candles back.

## Limitations

- SMMA is a **trend indicator** that shows the general direction of price movement, not reversal points.
- Due to its smoothing, SMMA **lags more than EMA** — during sharp price moves, entries may be less precise.
- For better accuracy, it is recommended to use SMMA **in combination with other indicators** (RSI, MACD, ATR) and support/resistance levels.
- In Veles bots, SMMA can be used as an entry or exit filter, combined with any other conditions.

## Summary

SMMA is a slow-reacting trend filter that produces a smoother line than EMA. In Veles bots, it helps filter out short-term market noise and supports strategies focused on sustained trends. Most effective on 4h timeframes and above, in combination with momentum indicators such as RSI or MACD.