To calculate the 3 point moving averages form a list of numbers, follow these steps:
1. Add up the first 3 numbers in the list and divide your answer by 3. Write this answer down as this is your first 3 point moving average.
2. Add up the next 3 numbers in the list and divide your answer by 3. Write this answer down as this is your second 3 point moving average.
3. Keep repeating step 2 until you reach the last 3 numbers.
Make sure you press the equals key when you’ve added the numbers up or you will only divide the last number by 3 (or insert brackets around the sum as shown in the examples below).
Finding the moving averages will help you identify the trend as you will see in the next 2 examples.
Example 1
The temperatures measured in London for the first week in July were as follows:
21⁰C, 24⁰C, 21⁰C, 27⁰C, 30⁰C, 28.5⁰C and 36⁰C
Calculate all of the 3 point moving averages and describe the trend.
1st 3 point moving average:
(21 + 24 + 21) ÷ 3 = 22⁰C
The 2nd 3 point moving average is:
(24 + 21 + 27) ÷ 3 = 24⁰C
The 3rd 3 point moving average is:
(21 + 27 + 30) ÷ 3 = 26⁰C
The 4th 3 point moving average is:
(27 + 30 + 28.5) ÷ 3 = 28.5⁰C
The 5th 3 point moving average is:
(30 + 28.5 + 36) ÷ 3 = 31.5⁰C
So the 3 point moving averages are:
22, 24, 26, 28.5 and 31.5
Since these moving averages are increasing then the general trend is that the temperatures are rising through the week.
Example 2
A shop records it’s sales figures for the first 6 months of the year:
January = £936
February = £939
March = £903
April = £870
May = £882
June = £810
Calculate all of the 3 point moving averages and describe the trend:
1st 3 point moving average:
(936 + 939 + 903) ÷ 3 = £926
The 2nd 3 point moving average is:
(939 + 903 + 870) ÷ 3 = £904
The 3rd 3 point moving average is:
(903 + 870 + 882) ÷ 3 = £885
The 4th 3 point moving average is:
(870 + 882 + 810) ÷ 3 = £854
So the 3 point moving averages are £926, £904, £885 and £854. Since the moving averages are decreasing then the sales figures are going down as the months go by.
Questions & Answers
Question: On a graph, would the first moving average be plotted half way through the Feb column?
Answer: Plot the point half-way between the 3 numbers you were dividing. So if it was for January, February and March plot the point on February.
Question: How do you perform a 6 point moving average?
Answer: Add up the first 6 numbers and divide by 6.
Then add up the next 6 numbers and divide by 6.
Keep repeating.
