moving average

Moving average

Used in charts and technical analysis, the average of security or commodity prices constructed in a period as short as a few days or as long as several years and showing trends for the latest interval. As each new variable is included in calculating the average, the last variable of the series is deleted.

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Moving Average

The average price of a security over a certain time period, calculated continuously. For instance, one may calculate a moving average by adding prices from the most recent trading days (for example, the last 10 days) and dividing by the number of trading days considered (in this case, 10). A moving average may or may not be weighted. Moving averages help smooth out noise that may be present in a security's price on a given trading day. See also: Simple Moving Average, Exponential Moving Average.

Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved

moving average

A series of successive averages of a defined number of variables. As each new variable is included in calculating the average, the last variable of the series is deleted. Suppose a stock's price at the end of each of the last 6 months is $40, $44, $50, $48, $50, and $52. The 4-month moving average in the fifth month is: ($44 + $50 + $48 + $50)/4, or $48. At the end of the sixth month, the 4-month moving average is ($50 + $48 + $50 + $52)/4, or $50. Technical analysts frequently use moving averages to discover trends in stock prices. See also 200-day moving average.

Wall Street Words: An A to Z Guide to Investment Terms for Today's Investor by David L. Scott. Copyright © 2003 by Houghton Mifflin Company. Published by Houghton Mifflin Company. All rights reserved. All rights reserved.

Moving average.

A moving average of securities prices is an average that is recomputed regularly by adding the most recent price and dropping the oldest one.

For example, if you looked at a 365-day moving average on the morning of June 30, the most recent price would be for June 29, and the oldest one would be for June 30 of the previous year.

The next day, the most recent price would be for June 30, and the oldest one for the previous July 1.

Investors may use the moving average of an individual security over a shorter period, such as 5, 10, or 30 days, to determine a good time to buy or sell that security.

For example, you might decide that a stock that is trading above its 10-day moving average is a good buy or that it's time to sell when a stock is trading below its 10-day moving average. The longer the time span, the less volatile the average will be.

Dictionary of Financial Terms. Copyright © 2008 Lightbulb Press, Inc. All Rights Reserved.

moving average

see SALES FORECASTING.

Collins Dictionary of Business, 3rd ed. © 2002, 2005 C Pass, B Lowes, A Pendleton, L Chadwick, D O’Reilly and M Afferson

moving average

see TIME-SERIES ANALYSIS.

Collins Dictionary of Economics, 4th ed. © C. Pass, B. Lowes, L. Davies 2005