Data Smoothing
Definition of 'Data Smoothing'The use of an algorithm to remove noise from a data set, allowing important patterns to stand out. Data smoothing can be done in a variety of different ways, including random, random walk, moving average, simple exponential, linear exponential and seasonal exponential smoothing. Data smoothing can be used to help predict trends, such as trends in securities prices. |
|
Investopedia explains 'Data Smoothing'The random walk model is commonly used to describe the behavior of financial instruments such as stocks. Some investors believe that there is no relationship between past movement in a security's price and its future movement. Random walk smoothing assumes that future data points will equal the last available data point plus a random variable. Technical and fundamental analysts disagree with this idea; they believe future movements can be extrapolated by examining past trends. |
Related Definitions
Articles Of Interest
-
An Introduction To J-Charting
Learn about a technical tool that's based on the view that markets are energetic systems. -
Charting Your Way To Better Returns
Learn about the powerful hybrid techniques that take advantage of both technical and fundamental analysis. -
Introduction To Stationary And Non-Stationary Processes
What to know about stationary and non-stationary processes before you try to model or forecast. -
Scenario Analysis Provides Glimpse Of Portfolio Potential
This statistical method estimates how far a stock might fall in a worst-case scenario. -
Market Summary For May 17, 2013
The U.S. stock markets moved sharply higher this week, on track for its fourth straight week of gains, driven by ongoing improvements in economic indicators. -
Parabolic SAR Buy Signals
The Parabolic SAR indicator is flashing "buy" in these four diverse stocks. Not simply relying on one indicator though, I take a look at the overall technical outlook and determine which ones ... -
Market Summary for May 10 2013
Major U.S. indices moved higher this week but, given the new highs, traders should watch for retracements next week. -
Quants: The Rocket Scientists Of Wall Street
Blend math, finance and computer skills to command a high - and well deserved - salary. -
Buying The Upward Trend Channel Bounce
Find out how to set up the trades for four stocks that are moving higher within well-defined trend channels. -
Market Summary for May 3 2013
The U.S. stock market extended its rally higher this week, led by technology stocks and lagged by small-cap stocks. Traders should be watching a number of other reports due out next week.
Free Annual Reports