## Tech School:’Moving Average’ Part2

December 12, 2008 by 123investor

Having discussed the basic properties of a moving average and the two popular kinds of moving average, simple and exponential, let us now move on to other more complex ways of calculating the moving average line.

Moving average line can also be plotted with the aid of linear regression techniques called the time series moving average or the linear regression indicator. A time series moving average plots the last point of the line instead of plotting a straight linear regression line. This moving average is plotted using the specified number of periods for each day. The individual points are then linked together with a line.

A triangular moving average is a weighted moving average where middle values are assigned more weight compared to the early and late values. It is merely a double-smoothed simple moving average, which is very vital in a volatile market as it helps to spot significant trends without difficulty.

A variable moving average is an exponential moving average that’s able to automatically alter its smoothing constant based on the volatility of the data series. Sensitivity is increased by giving more weight to the current data thus making it a better indicator for the short term.

Volume adjusted moving average incorporates volume in its calculation. In calculating this average line under this method, the weights are assigned proportionate to the volume recorded on that day. Thus days with higher volume is given greater weight than days with lower volumes.

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