A Simple Moving Average (SMA) is a statistical calculation used to analyze data points by creating averages over a specific time period. It helps smooth out fluctuations in data, making it easier to identify trends. For example, in finance, an SMA can be applied to stock prices to understand their general direction over time. To calculate an SMA, you add up the closing prices of a stock over a set number of days and then divide by that number of days. This method is commonly used in technical analysis to help traders make informed decisions about buying or selling assets, such as stocks or commodities.