Excel Formula to Find Displaced Moving Average (With Easy Steps)

In this article, I will discuss the details of the Displaced Moving Average (DMA) formula in excel. DMA is a variation of Simple Moving Average (SMA). So, to get a broader perspective, before working with Displaced Moving Averages, we have to understand SMA. Basically, the Simple Moving Average (SMA) is the series of averages for the different groups of the same data range. Sometimes, we name SMA as rolling or running average too. For example, I have a dataset containing yearly average temperatures. So, I will first calculate the SMA t and then explain the Displaced Moving Average.


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What is Displaced Moving Average?

Displaced Moving Average (DMA) is a Simple Moving Average that is adjusted forward or back in time to get a better forecast trend. DMA can be positive or negative. Positive displaced average means all the averages are shifted forward in time, Similarly, negative displacement indicates all the average values are shifted back in time. This moving average technique is widely used in stock market/bank and weather data analysis. Besides DMAs are useful in case of trend following purposes, compared to SMAs.


Calculate Simple Moving Average Using Formula in Excel

Earlier in this article, we have mentioned before finding Displaced Moving Average we have to calculate SMA using an excel formula.

Step-1: Dataset Introduction

Suppose I have a dataset containing average temperature data year-wise. Now I will calculate the 3-year Moving Average temperature using the AVERAGE function in excel.

Calculate Simple Moving Average Using Formula in Excel

Read More: How to Calculate Average in Excel (Including All Criteria)


Step-2: Apply Formula

  • First, type the below formula in Cell C7.
=AVERAGE(C5:C7)

Calculate Simple Moving Average Using Formula in Excel

  • Hit Enter. As a result, for the year 2016-2018, we will get below average. Use Autofill (+) to copy the formula to the rest of the cells.

Calculate Simple Moving Average Using Formula in Excel

  • Then we will get the below output. Here, notice that the average formula is updated according to the data subsets (C6:C8, C7:C9, and so on).


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Step-3: Insert Chart

Now I will show the moving average trendline in a chart. To do that, go to Insert > Recommended Charts from Excel Ribbon.

Calculate Simple Moving Average Using Formula in Excel

  • Consequently, the Insert Chart window will show up. Choose the chart style from there and click OK.

Calculate Simple Moving Average Using Formula in Excel

  • Finally, the chart along with the moving average trendline appeared.

Read More: How to Generate Moving Average in Excel Chart (4 Methods)


Displaced Moving Average Formula in Excel

The formula for calculating Displaced Moving Average is:

=DMA(period, shift_period)

Here, the first argument specifies the period of a Simple Moving Average (such as 15 years), the second argument specifies the shift period (example: 5 years). In case you are calculating DMA  back in time, type a negative number to shift the moving average back (Such as -5 years).

Usually, DMAs are termed as 10 DMA, 20 DMA, 50 DMA, etc. Such as, in our example, a 10 DMA  means the yearly average temperature for the last 10 years. Similarly, a 50 DMA indicates the yearly average temperature for the last 50 years.

Read More: How to Calculate Moving Average in Excel (4 Examples)


Conclusion

In the above article, I have tried to discuss the idea of Displaced Moving Average and how to calculate it in excel. Hopefully, the above explanation will be enough to solve your problems. Please let me know if you have any queries.


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Hosne Ara

Hosne Ara

Hi, This is Hosne Ara. Currently, I do write for ExcelDemy. I have a long experience working with different industries and I have seen how vast the scope of Microsoft Excel is. So, eventually, I started to write articles on Excel and VBA. Basically, my articles are targeted to help people who are working in Excel. By profession, I am an Engineer. Materials and Metallurgical Engineering is my major. Besides, I am a certified Project Manager (PMP) too. I have worked with Power Plant and IT industry earlier. As a person, I am detail-oriented and love doing research. Establishing a greener world is one of my mottos.

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