posted
can someone explain to me what the moving average of a stock is? and how to determine it, thanks
Posts: 20 | From: azusa, ca, USA | Registered: Jan 2004
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It is a computer generated number. But we can do to however slow. IT is a continous line joined by adding the las prices. Let me explain it. A 5-D MA is average of last 5 periods. For example last week a stock closes from monday to friday is 1,2,3,4,5 respectively. The moving average will be for monday this week will be (1+2+3+4+5)/5=15/5=3 then again if it closes today at 6 dollars for example the 5 D MA will be 2+3+4+5+6 divided by 5 which is 20/5 is 4 . These points are connected and a smooth line is obtained. MA are found more reliable tools to estimate the actual values in some economic datas like Weekly jobless claims or so.