What is a moving average?

A moving average is a statistic that captures the average change in a data series over time. In finance, moving averages are often used by technical analysts to keep track of price trends for specific securities.

How do you calculate a simple moving average (SMA)?

A simple moving average (SMA), is calculated by taking the arithmetic mean of a given set of values over a specified period. A set of numbers, or prices of stocks, are added together and then divided by the number of prices in the set. The formula for calculating the simple moving average of a security is as follows:

How do you graph a 200-day moving average?

Step 1: To graph the 200-day moving average of a stock (or even longer durations), collecting a broad range of data is ideal. Get closing prices going back at least 13 months from the latest price. Copy that data onto a spreadsheet. In this example, the prices of a stock cover two years, filling more than 500 rows.

How do you use the linear moving average method?

You can use the linear moving average method by performing consecutive moving averages. This is often done when there is a trend in the data. First, compute and store the moving average of the original series. Then compute and store the moving average of the previously stored column to obtain a second moving average.