The SMA is a commonly used technical analysis tool in trading. It calculates the average of a stock's price over a specific number of days. For example, a 50-day SMA will average the closing prices of a stock over the last 50 days.

Visualization Setup:

1. We'll plot a hypothetical stock price over time.
2. Overlay a 50-day SMA on the same chart.
3. Observe how the SMA smoothens out the price fluctuations to give a clearer trend.

Here's the visualization:

1. Blue Line (Stock Price): This represents the hypothetical stock price over 200 days. As you can see, it has ups and downs, much like a real stock would due to market dynamics.

2. Red Dashed Line (50-day SMA): This line represents the 50-day Simple Moving Average (SMA). It's a smoothed out version of the stock price. Notice how it lags behind the stock price slightly and doesn't react as violently to short-term price fluctuations.

How to Interpret:

• The SMA provides a clearer trend of the stock price over time. When the blue line is above the red line, it indicates that the stock is performing better than its recent average. Conversely, when the blue line is below the red, the stock is underperforming its recent average.
• Traders might use this to identify potential buy or sell signals. For instance, when the stock price crosses above the SMA, it might be considered a bullish (positive) signal, and when it crosses below, it might be seen as bearish (negative).

This visualization gives a clear understanding of how a function (in this case, the SMA) can be applied to trading data (stock price) to derive insights and make decisions.