By Peter Rutherford on Saturday, February 23, 2002 - 12:08 am:
Where does one plot the moving average? Is it at the middle of the time interval over which it has been calculated (as some texts would suggest) or is it not (as others would suggest)?
By Graeme Mcrae on Wednesday, February 27, 2002 - 11:32 pm:
The stock market graphs that I see most frequently plot the
moving average at the endpoint of the time interval over which the
data were collected.
It is important for some hairbrained stock-picking schemes that it
be plotted this way because these schemes generate "buy" or "sell"
recommendations when today's price "crosses" the moving
average.
As the stock price trends generally higher over time, the graph of
the stock's price will stay above the moving average. When it stops
trending higher, the moving average will "catch up" to and perhaps
cross the graph of the stock's price.
If the moving average were plotted anywhere else, then these people
would have trouble implementing their trading schemes.
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