Question

How many periods can you use to calculate a n period moving average forecast?

1) 1
2) 2
3) n
4) n-1

Answer 1

To calculate an n period moving average forecast, one would use n periods of data. Collect and sum the data for n consecutive periods, and divide the sum by n. This process is repeated as new data becomes available.

Step-by-step explanation:

To calculate an n period moving average forecast, one needs to use n periods of data. For instance, if you're looking at a 5-day moving average, you need to use 5 days of data. This process involves adding up the data points for those periods and then dividing by the number of periods (n) to find the average. This methodology helps smooth out short-term fluctuations and highlight longer-term trends or cycles.

If you want to implement this for any number; for example, n=5, you would follow these steps:

The moving average is recalculated as new data becomes available, by dropping the oldest period and adding the newest period.