---
title: "Simple Moving Average (SMA) Entry Settings"
description: "How to enter a trade based on the Simple Moving Average indicator"
url: https://help.optionsautotrader.com/en/articles/170-simple-moving-average-sma-entry-settings
collection: "Options Auto Trader 101"
updated: 2026-04-16
language: en
---

# Simple Moving Average (SMA) Entry Settings

How to enter a trade based on the Simple Moving Average indicator

The **Simple Moving Average (SMA) Entry Settings** allow you to control when your bot enters a trade based on whether the asset is trading **above or below a chosen moving average line**. This makes it easy to automate strategies that depend on trend direction.

## What Is the SMA?

A **Simple Moving Average (SMA)** is a technical indicator that shows the average price of an asset over a set number of days.

-   A **50-period SMA** shows the average closing price of the last 50 days.
    
-   A **200-period SMA** shows the average closing price of the last 200 days.
    

The SMA helps traders identify long-term trends:

-   **Above the SMA** = the asset may be in an uptrend.
    
-   **Below the SMA** = the asset may be in a downtrend.
    

## How the Settings Work

When creating or editing an Auto Trader, you’ll find the **SMA Entry Rule** under **Entry Settings**.

-   **Period**: The length of the SMA you want to use (e.g., 50, 100, 200). The calculation is always based on the **daily chart**.
    
-   **Direction**: Whether the bot should only enter if the asset price is **above** or **below** the selected SMA.
    

⚠ SMA Entry Settings are available for **ETFs, Stocks, and Index Options**. They do **not** apply to futures options. If used with a futures options Auto Trader, the SMA is based on **SPY** instead of the futures contract.

## Example

1.  **Trend-Following Strategy**
    
    -   You want to only take trades in an uptrend.
        
    -   Set **Period = 200** and **Direction = Above**.
        
    -   The bot will only enter trades if the asset is trading above the 200-day SMA.
        
2.  **Mean Reversion Strategy**
    
    -   You want to trade assets that are weak and trading below trend.
        
    -   Set **Period = 50** and **Direction = Below**.
        
    -   The bot will only enter trades if the asset is below the 50-day SMA.
        

## Why This Matters

-   Ensures trades align with your **trend-based strategy**.
    
-   Filters out trades that don’t fit your preferred market direction.
    
-   Allows easy automation of classic strategies like “trade only above the 200-day SMA.”
    

## Summary

-   SMA Entry Rules use the **daily chart** for calculation.
    
-   You set a **Period** (e.g., 50, 100, 200) and a **Direction** (above or below).
    
-   Works with **ETFs, Stocks, and Index Options** (SPY is used for futures).
    
-   Helps automate **trend-following or mean reversion strategies**.