The Smoothed Moving Average (SMMA) differs from a simple MA and an EMA in one key way: it uses all available price history rather than a fixed lookback window. Each new value takes the prior SMMA, adds the latest close, then subtracts a proportional slice of the prior SMMA. The effect is a persistent memory that decays very slowly — recent prices matter most, but older prices never fully disappear.

In practice, SMMA reacts more slowly to price changes than either a simple moving average or EMA of the same period length. That slower response means it takes longer to signal a trend change, but it also generates fewer false signals in noisy markets. When a price crosses a long-period SMMA, the move is more significant than the same cross on a standard MA — it takes sustained pressure to move the line.

Wilder used this exact smoothing method as the basis for his ATR and RSI calculations, which is why those indicators respond the way they do. On a chart, SMMA sits further from price than an EMA of the same period, acting as a stable trend anchor. When price is cleanly above a long-period SMMA, the trend is firmly established and has been for a while.