Smoothed moving average

What the numbers mean

The period controls how much of the previous average is carried forward: each new value keeps the old average and folds in only a fraction of the new bar. Nothing ever fully leaves the calculation, so an SMMA runs smoother and slower than an SMA of the same length.

• 14 — Wilder's default, the same lookback he used for RSI, ATR and ADX
• 21 or 50 — used when an even slower background trend line is wanted

How it is used

Used for the underlying direction of a trend rather than entries, and as the smoothing inside Wilder-based indicators such as RSI and ATR.

• Read for slope and direction rather than for crossovers
• Useful on noisy intraday charts where an SMA still whips around

How it relates to everything else

An SMMA is what sits inside every Wilder indicator. When RSI, ATR, ADX and DYMI are described as using 14 periods, it is this style of smoothing doing the work — which is why those indicators all feel slower than their period suggests, and why comparing an RSI(14) to an SMA(14) is not comparing equivalent windows.

• The smoothing engine behind RSI, ATR and ADX
• An SMMA(14) behaves roughly like an EMA(27) — old data never fully leaves
• Pair with a faster EMA when a slow reference line is needed underneath it

What to watch for

The extra smoothness is bought with extra lag. It will hold its slope well past a genuine turn, so it is a poor tool for timing exits.