AGEC 4273 Chapter : Calculation Of Moving Averages
Document Summary
A moving average (denoted ma) is obtained by calculating an average to a moving sample of prices over time (e. g. daily or monthly prices). Often, a moving average is labeled a smoothing technique because it removes the day-to-day fluctuations in prices, thus revealing seasonal and trend patterns in prices which are much easier to read. In agribusiness forecasting and investing, moving averages are used as technical analysis indicators and the individual calculating or reading the moving averages is called a technical analyst (ta). A ta forms an opinion of the underlying trend in a stock from reading a moving-average chart (chart reading is sort of like x-ray reading it is useful for diagnostics but not full proof of what is, or will, happen). Trading using this technique is called technical trading. This lecture covers the calculation of a simple moving average and compares how well it represents the actual stock price pattern.
