With a simple moving average, the number of periods used has a major impact on its ability to smooth out fluctuation but does not have much impact on its forecasting ability.

Question

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The number of periods used in a simple moving average not only affects its ability to smooth out fluctuations but also significantly impacts its lag and thus its forecasting ability. A larger number of periods will result in a smoother moving average but can also increase the lag, making it less responsive to recent price changes and potentially less useful for forecasting short-term trends.

With a Simple Moving Average, the Number of Periods Used