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moving average

moving average

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A moving average, in finance and especially in technical analysis, is one of a family of similar statistical techniques used to analyze time series data.

A moving average series can be calculated for any time series, but is most often applied to stock prices, returns or trading volumes. Moving averages are used to smooth out short-term fluctuations, thus highlighting longer-term trends or cycles. The threshold between short-term and long-term depends on the application, and the parameters of the moving average will be set accordingly. Exponential Moving Average - EMA.

Mathematically, each of these moving averages is an example of a convolution. These averages are also similar to the low-pass filters used in signal processing.

Simple moving average

A simple moving average (SMA) is the unweighted mean of the previous n data points.