How do I Calculate a Trailing Average?

by Pete Collins; Updated September 26, 2017
A trailing average will smooth out the peaks and troughs.

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.

Step 1

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

Step 2

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.

Step 3

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.

Step 4

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

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

About the Author

Pete Collins has been writing since 2007, primarily on data analysis and environmental science topics. Collins has a Bachelor of Science in ecology from the University of East Anglia and a Master of Science in environmental biogeochemistry from Newcastle University.

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