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Moving average |
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Moving averageMoving averages are one of the oldest and most popular of technical analysis tools. A simple moving average is calculated by adding together the closing prices of a financial instrument over a certain number of days and then dividing the sum by the number of days involved. So, for example, the seven day average for a share price would be calculated by taking seven days worth of data, adding them together and dividing by seven.To calculate the *moving* average:Start by taking the first seven days worth of data and calculating the average value. This is your first point on the moving average chart.Then add the prices for Days 2-8 together and divide by 7. This is the second point on your moving average chart. Continue doing this for Days 3-9, 4-10 and so on, each time plotting the average on the chart. You now have a moving average chart.There are lots of ways of interpreting moving averages. The most basic is to treat a change of direction in the moving average as a signal to buy or sell, so if the moving average has been consistently rising and then it falls, that is a signal to sell.The classical interpretation, used by most technical analysts, is to compare the moving average with the price of the underlying share and to plot them both on the same graph. Before the share price rises above its moving average, buy the share; when it falls below its moving average, sell the share. That is putting it in extremely simple terms, and for a more sophisticated understanding, read one of the many books on the subject. An analyst would normally also consider other types of indicator before making a decision.Similar MatchesAverage costAverage costTotal cost divided by output. Average productAverage productThe average product of a factor in a firm or industry is its output divided by the amount of the factor employed. Lipper Mutual Fund Industry AverageLipper Mutual Fund Industry AverageThe average level of performance for all mutual funds, as reported by Lipper Analytical Services. Average collection period, or days receivablesAverage collection period, or days receivablesThe ratio of accounts receivables to sales, or the total amount of credit extended per dollar of daily sales (average AR/sales 365). Volume weighted average priceVolume weighted average priceA calculation performed by the London Stock Exchange to set closing prices for shares traded on the SETS order book system.In simple terms, the value of trades is divided by the volume over a given period. The LSE uses a closing 10 minute VWAP to set closing prices on SETS. Further SuggestionsAverage daily balanceArithmetic average (mean) rate of return Weighted average remaining maturity General Average Contribution Average propensity Average down General Average Average up Average tax rate Free of Particular Average average true range bands Weighted average maturity Import-weighted average tariff With Average (WA) Average life Average accounting return Dow Jones Industrial Average Nikkei stock average Average propensity to consume Average rate of return (ARR) Yield to average life Expost average rate of return exponential moving average Average tariff Average propensity to import |
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