Overview
Moving averages are used to smooth out short-term fluctuations and highlight longer-term trends or cycles in time series data. They 'move' because the average is recalculated as new data becomes available.
Types
- Simple Moving Average (SMA): The unweighted mean of the previous n data points.
- Exponential Moving Average (EMA): Gives more weight to recent data points, making it more responsive to new information.
Use Cases
- Technical analysis in stock trading.
- Demand forecasting in supply chain management.
- Smoothing sensor data in engineering.