MOVING AVERAGE CURVE

What is Moving Average?

            Moving average is technical analysis which is calculated to analyze data points by creating of series of averages of past share prices. There are different types of moving average that can be used for analysis such as Simple, Exponential, Time Series, Triangular, Variable, Weighted and Welles Wider. The two basically used moving average are simple moving average (SMA) and exponential moving average (EMA).

Simple Moving Average:

In simple term, simple moving average is the unweighted mean of previous ‘n’ data. It is calculated by adding the closing price of stock for a number of times dividing by number of period of times.

fig: simple moving average curve, copyright@www.moneybazars.com

Exponential Moving Average:

            An exponential moving average is similar to simple moving average but more weight is given to latest data in exponential moving average. It is also known as exponentially weighted moving average.

fig:exponential moving average,copyright@www.moneybazars.com

Simple Moving Average Curve Vs Exponential Moving Average Curve:

fig:simple moving average curve VS exponential moving average curve, copyright@www.moneybazars.com