A moving average is used to compare a set of figures over time. For example, suppose you have measured the weight of a child over an eight year period and have the following figures (in kg):
32, 33 ,35, 38, 43, 53, 63 ,65
Taking the mean doesn't give us much useful information. However, we could take the average of each 3 year period. These are the 3-year moving averages.
The first is: (32 + 33 + 35)/3 = 33.3
The second is: (33 + 35 + 38)/3 = 35.3
The third is: (35 + 38 + 43)/3 = 38.7, and so on (there are 3 more!).
To calculate the 4 year moving averages, you'd do 4 years at a time instead, and so on...
(this was borrowed from here)THIS is also a good source to read more about it
Labels: Data Handling