Moving Average – Mathematical Treatment

A very simple mathematical and flexible method for measuring trend is the moving average method which consists in:

1. Fitting a polynomial of power p(<m) The first M values,
2. Using the polynomial to estimate the value in middle of the range,
3. Repeating the operation with M terms starting from 2nd , 3rd etc. terms.
Thus, the moving average is characterized by two constants which are m and p, moving average can also be represented as [m,p]. Given below, are the three cases of moving averages with different ‘p’.