Quantitative knowledge base
Concepts
Clear definitions, formulas and worked examples for methods used in financial analysis and quantitative research.
Current field
Moving averages
Three related smoothing methods presented as a connected learning path. Each entry moves from definition to calculation, interpretation and practical limits.
- 01 SMA Simple Moving Average The simple moving average is the arithmetic mean of a fixed number of consecutive observations. As a new observation enters the window, the oldest one leaves, so every included value always has equal influence.
- 02 EMA Exponential Moving Average The exponential moving average is a recursively calculated average that gives the newest observation the greatest influence while allowing earlier observations to decay gradually rather than disappear at a fixed boundary.
- 03 WMA Weighted Moving Average The weighted moving average combines observations using predetermined weights. In its common linearly weighted form, the newest value receives the largest weight and the weights decrease by equal steps for older values in a fixed window.
Interactive method comparison
Moving Average Explorer
Compare how three smoothing rules respond to the same illustrative market series across changing trends and volatility.
SMA gives equal weight to observations inside the window.
EMA responds more strongly to newer values.
WMA applies specified linear weights across the window.
This educational illustration compares calculation methods; it is not a trading signal or investment recommendation.
How to use this library
Start with the rule. Then inspect the trade-off.
A formula describes how a measure is constructed; it does not establish that the measure is suitable for every dataset or decision. Each concept therefore pairs mechanics with assumptions and limitations.