A moving average is a statistical technique that can be used to get a better understanding of the trends within a (X) number of periods or a data set. It does this by gathering the average of a defined subset within a series of numbers.
An example would be if there were 4 numbers in our series and we wanted to calculate the moving average for the most recent 3 periods. Period 1 equals 3, period 2 equals 5, period 3 equals 4 and period 4 equals 6. Our moving average would be calculated by adding periods 2 through 4, or, 5 + 4 + 6 = 15. You would then divide by 3, as you want the moving average for the most recent 3 periods. In our example the moving average would equal 5. There are two different type of moving averages: a weighted moving average and a simple moving average.
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