Moving average

A moving average is the average price of something, which is constantly adjusted over time to reflect the addition of new data. For example, someone might want to track the moving average of a company's stock on the open market, and so develops a 90-day moving average; this average is calculated based on the ending stock price for just the past 90 days. Thus, as the data for each new day is added, data at the back end of the calculation is dropped. A moving average will appear to be more volatile when the data for only a short period of time is used. As the tracking period is extended, the weight of the extra data makes it more difficult to move the average.

A moving average is commonly used to detect spikes and dips in individual data points that are either above or below the average, respectively. This can be used in accounting to detect possible variances in financial data. It can be used in technical analysis to determine when stock prices are unusually high or low.