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7141
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MATH INTERNAL ASSESSMENT

GOOD SHEPHERD INTERNATIONAL SCHOOL

MATHEMATICS

MARCH 2024

Calculate moving averages with the given even Periodicity.


Plot them and as well as the original data on the same graph.

KEVIN JOHN JOSEPH MUTHALALY

11-A

7141

SUBMITTED TO:

Mrs. Mili Jay


INDEX

● CERTIFICATE
● ACKNOWLEDGEMENT
● NAME OF THE PROJECT
● INTRODUCTION
● Add headings if your project has any
● CONCLUSION
● BIBLIOGRAPHY
CERTIFICATE
This is to certify that Kevin Joseph of class XI-A has successfully
completed this mathematics project on the topics mentioned
prescribed by MRS. MILI JAY, during the academic session 2023-
2024 as per the guidelines issued by ISC.

INTERNAL EXAMINER EXTERNAL EXAMINER


ACKNOWLEDGEMENT
I would like to express my special thanks of gratitude to Mrs. Mili
Jay who gave me the golden opportunity to do this wonderful
project on the topic “Calculate moving averages with the given
even Periodicity. Plot them and as well as the original data on the
same graph. ” which also helped me in doing a lot of research and
i also came to know about so many things.
Secondly i would also like to thank my classmates in mathematics
who helped me a lot in finishing the project within the limited time.
It helped me increase my knowledge and skills.
Prior Knowledge

Moving Average
Moving averages are a common way for technical traders to
begin the process of price analysis. It is often one of the first
indicators that traders will add to their charts and will serve as a
measure on its own or in comparison with other indicators.

A moving average is the average price of a futures contract or


stock over a set period of time. Traders can add just one moving
average or have many different time frames on one chart.

For example, a 14-day moving average of CL WTI futures would


be the average closing price of the CL contract over the last 14
days.

Purpose

Moving averages are used in cyclical variations to eliminate


fluctuations due to cyclical changes in time series. The cyclical
variations are smoothened by averaging the values for the
variate for a specified number of successive years (months or
weeks etc.). The number of years (months or weeks etc.) over
which the values are averaged depends upon the length of the
cycles found in the time series. The time-interval over which the
averages are taken is called the period of the cycle.
Importance
The direction of a moving average line assists the trader in
understanding which way the price of a financial instrument is
moving.

If the price of a financial instrument is above the moving average


line, it is said to be on an uptrend. On the flip side, if its price is
under the moving average line, it’s on a downtrend.

If the moving average line of a stock doesn’t show any vertical


movements for a long period of time, it indicates that the stock
price is ranging and not trending. This is observed when a stock is
traded between constant high and low prices for a certain period.

Moving averages also work as support and resistance indicators


for traders. Most times, the price of stock finds support at the
moving average line when the trend is up. Conversely, it meets
with resistance at the line when the trend is down.

Also known as a lagging indicator, a moving average line is based


on previous closing prices. Hence, instead of giving a warning
beforehand, it will only confirm a change in trend.

Merits of Moving Average Method

● Moving averages help in identifying the trends. This allows


the traders to avail of and understand the trends established
in the market.

● It also acts as a support system as it helps in determining


potential price support.

● It provides the support to measure the momentum as well. It


helps to determine the direction and strength of the asset’s
momentum.

Demerits of Moving Averages

Although calculating moving average offers a quick and easy way


to identify trends of financial instruments, they have the following
disadvantages:

● Since each stock or commodity has its unique price history,


no set rules can be implemented across all markets. Hence, a
moving average cannot show the constant changes in their
prices.

● The primary purpose of identifying a trend is to predict the


future values of the stock. But, if the security does not trend
up or down, calculating moving averages will not be able to
provide the traders with an opportunity to profit.

● Stocks often tend to show a cyclical behavioural pattern that


cannot be interpreted by a moving average.

● Moving averages have the ability to be spread out over


different time frames, but this can become quite tricky in
specific situations.

● Similar to other technical analysis methods, moving


averages do not consider the changes in primary factors
that have an effect on the market price of a stock. Changes
in the managerial structure of a company, changes in
product demand of industry are also not taken into account.

Calculating Moving Average


The moving average of a period (extent) m is a series of
successive averages of m terms at a time. The data set used for
calculating the average starts with first, second, third and etc. at
a time and m data taken at a time.

In other words, the first average is the mean of the first m terms.
The second average is the mean of the m terms starting from the
second data up to (m + 1)th term. Similarly, the third average is
the mean of the m terms from the third to (m + 2) th term and so
on.

When the period of the moving average is even, then we need to


synchronize the moving average with the original time period. It is
done by centering the moving averages i.e., by taking the
average of the two successive moving averages.
Here, the 4-yearly moving averages are centered so as to make
the moving average coincide with the original time period. It is
done by dividing the 2-period moving totals by two i.e., by taking
their average. The graphic representation of the moving averages
for the above data set is
Bibliography

https://www.cmegroup.com/education/courses/technical-
analysis/understanding-moving-averages.html

https://groww.in/p/moving-averages#:~:text=Merits%20of
%20Moving%20Average%20Method,measure%20the
%20momentum%20as%20well.

http://www.ilovemaths.in/wp-content/uploads/maths-content/
classes11th12th/isc12c-index-numbers-and-moving-averages.pdf

https://www.toppr.com/guides/business-mathematics-and-
statistics/time-series-analysis/moving-average-method/
#:~:text=When%20the%20period%20of%20the,the%20two
%20successive%20moving%20averages.

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