Moving average
For each window, add the observations and divide by the number of periods. The period length affects smoothness, lag and seasonal treatment. An even-period moving average may need centring to align estimates with individual periods in seasonal analysis. State the window and alignment.
Worked example
Monthly sales are 90, 120, 150 and 180 units. The first three-month moving average is 120; the next is 150 units.
Common mistake
Averaging non-consecutive periods, or treating the smoothed value as an actual observation.
Where it appears in your exams
| Qualification | Exam | Relationship | Period |
|---|---|---|---|
| ACCA | MA | Direct | September 2026–June 2027 |
| FIA | FMA | Direct | September 2026–June 2027 |
