SMA - Simple Moving Average - View

What is Simpe Moving Average

Simple moving average is a trending indicator that eliminates the volatility of daily fluctuations in sales and smoothes it out. A simple moving average is based on past sales data and thus lags current sales, but the information it provides can be very important.

Simpe Moving Average is sometimes called Rolling Average.

Usin SMA in the AppSalesTrends App

You can select from 6 dfifferent time frames: 7 days, 14 days, 30 days, 90 days, 182 days, and 365 days. You select the time frame from the Time Frame pop-up menu. For each time frame you can select any date range from the Date Range Selection at the bottom center of the window.

Below are examples of simple moving averages of 1 week, 2 weeks, 1 month, 3 months, 6 months, and a year. All graphs have a Date Range of about two years. As you can see, the wider the Time Frame is, the less noise there is in the graph. The 1-year Time Frame complete eliminates all seasonal fluctuations and you are able to see the real trend of your sales.

Benefits of Using SMA

Using moving averages is the easiest way to determine the trend of your sales. If the moving average is pointing up, sales are trending higher in the given Time Frame. If the moving average is pointing down, sales are trending lower. The Time Frame of the moving average determines how responsive the moving average is. A simple moving average with a shorter Time Frame —such as the 30-day simple moving average—is going to be much more responsive than a longer-term moving average—such as the 182-day simple moving average.

Different Time Frames are used to eliminate different fluctuations. A 7-day moving average removes fluctuations that are based on different sales on each weekday. Some Time Frames can exaggerate fluctuations, like the 90-day moving average that will exaggerate seasonal flunctuations.

The 365-day Moving Average

The 365-day moving average completely elimates all seasonal flunctuations because in a 365-day moving average graph each day of each month is calculated once. In the images above, it seems that sales have dropped dramatically if the Time Frame is anything from 7 days to 182 days. But the 365-day moving average shows that the real trend (without seasonal noise) is still up.

Comparing the current SMA to a previous SMA

The AppSalesTrends app allows you to compare the current SMA to the SMA of the previous week, month, quarter, or year. Below is a comparison of 30-day SMA to the 30-day SMA of the previous year of sales to consumers (no EDU sales) without and with bundle sales. It is easy to see that bundle sales have stabilized the long term sales trend.