Question

How do researchers use simple moving averages in their data studies?

Answer 1

Answer:

The simple moving average (SMA) is the most basic of the moving averages and the simple moving average model is based on the assumption that an simple average is a good estimator of future price movement. It is simply the average price over the last N periods.

Where,

• F_t = Forecast for the coming time period
• N = Number of periods to be averaged
• A_t-1 = Actual occurances in the past period for up to "n" period

Reseachers can use simple moving averages in

• Trading systems to reflect trends in the stock market
• In Research field, simple moving average method can be used to determine or provide the best estimate of the LC50 value along with its confidence interval.
• It can be used as a Demand Forecasting technique