What is a key advantage of using a moving average rather than raw data?

Using a moving average primarily helps in smoothing out fluctuations in the data over a specified period. This is particularly beneficial when analyzing time series data that may exhibit short-term variations or noise, such as daily sales figures or stock prices. By averaging data points over a defined time window, the moving average mitigates the impact of sporadic spikes or drops, allowing for a clearer visualization of underlying trends and patterns.

This smoothing effect makes it easier for decision-makers to identify longer-term trends without getting distracted by the erratic nature of the raw data. Essentially, the moving average provides a more reliable basis for forecasting and planning, as it highlights sustained performance changes rather than transient anomalies.