How do I Calculate a Trailing Average?

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A trailing average will smooth out the peaks and troughs.
A trailing average will smooth out the peaks and troughs. (Image: stock graph drawing image by .shock from Fotolia.com)

Trailing typically refers to a certain time period up until the present. For example, a 12-month trailing period would refer to the last 12 months up until this month. A 12-month trailing average for a company's income would be the average monthly income over the last 12 months. Taking an average like this can help smooth out fluctuating or cyclical data series. A trailing average may also be referred to as a moving average.

Gather your data and arrange it in chronological order with the time periods noted (for example, January income, February income and so on).

Examine the data and decide on an appropriate trailing period. If the data is likely to be seasonal, a 12-month period is probably best, to smooth out the winter troughs and summer peaks (or vice versa). If the data refer to a quarterly publication, a three-month period would be best.

Calculate the average of the first three months' data if you are using a three-month trailing period. If your data begins in January, calculate the average of January, February and March. This figure becomes the three-month trailing average for March.

Calculate the average of February, March and April if you are calculating a three-month trailing average for April. Follow this pattern for other portions of the year.

Tips & Warnings

  • The trailing average can be calculated using pen, paper and calculator, or in a spreadsheet.

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