Simple moving average, which we will refer to as SMA, is a basic technical analysis indicator. The simple moving average, as you may have guessed from its name, is computed by adding up the price of an instrument over a certain period of time divided by the number of time periods. It is basically the price average over a certain time period, with equal weight being used for each price. The time period over which it is averaged is often referred to as the lookback period or history. Let's have a look at the following formula of the simple moving average:

Here, the following applies:

: Price at time period i

: Number of prices added together or the number of time periods

Let's implement a simple moving average that computes an average over a 20-day moving window. We will then compare the SMA values against daily prices, and it should be easy to observe the smoothing that SMA achieves.