TSM - Simple Moving Averages Lesson

Simple Moving Averages

Introduction

As you may have noticed, there is a LOT of data to consider when purchasing and selling stocks. The data can be overwhelming when placed in a table, so charts and graphs are created for a more visual approach. Knowing how to read these charts are important, but even more so is how to interpret and extrapolate useful data. Investors want to be able to predict when they should buy and when they should sell stocks. You will have an advantage over other investors if you can read and interpret the stock data!

Smoothing Techniques

Take a look at the following stock value charts. They are really hard to read! The data fluctuates a lot between each value. Investors use what is called a smoothing technique which does exactly that – it smooths out the data so that there is less fluctuations. This way, the graph can more easily be interpreted to find patterns and trends.

 

 

 

In Your Notebook: Please take down important notes, such as formulas, and attempt the practice examples on your own before viewing the solutions!

SMA Calculation Methods

A simple moving average (SMA) can be found by calculating specific averages using the data. There are two ways of doing this. Click on the flip cards to see each method. Click on the arrow on the bottom right to advance the slides in the activity.

Using a Spreadsheet for SMAs

If you found the previous problems challenging, here is a video that will go over the answers using a spreadsheet.

Simple Moving Data Short Answer Practice

Using any method of choice, determine the 5-day simple moving averages.  Click on the arrow in the bottom right corner to advance the slides.

 

Complete the activity below.  After you drag your answer into the box, click on the arrow in the bottom right corner to advance to the next problem.

IMAGES CREATED BY GAVS