Since I’m such a fan of moving averages for investing / trading I thought this post about the Google 15 was pretty cool. The “Google 15″ is a widget / gadget which you can add to your Google Homepage to help you lose (or gain) weight. I like how they use moving averages to help people stay on trend (emphasis is mine):

The Google 15 encourages you to get on the scale every day by calculating a moving average from your daily weight. We then plot this average alongside your daily scale weight and a goal weight that you set–this gives you a better idea of your weight trend by masking most of the day to day noise that variances in water weight introduce.

If you’ve ever tried to lose weight, you’ve undoubtedly experienced the excitement of getting on the scale to see that you “lost” two pounds since yesterday. Unfortunately, that tends to be followed by the depression that you “gained” three pounds the next day. It’s impossible to “lose weight” every day according to your scale weight, so as a result, most people cultivate an irrational (but very real) fear of their scale and only climb on to get feedback on their weight loss efforts every week or two.

Your exact scale weight isn’t really important as long as it’s “ahead” of the trend you’re aiming for. If you’re trying to lose weight, you want your day-to-day scale weight to be below your moving average–concentrate on your moving average weight, not your scale weight! In the example on the right, note that on 4/10 it looks like the user “gained” three pounds according to the scale weight, but the moving average merely leveled out. But this is no reason to panic–the next day’s weight continued the downward trend.

Of course, the big secret that you never hear is that the hardest part about losing weight is keeping the weight off once you’ve lost it. The Google 15 generally considers you to be on goal as long as your moving average weight stays within 2.5 pounds of your goal weight. So don’t stop using it once you’ve made your goal weight–enter your weight every day and it will give you an early warning if you start to pack on the pounds!

I often use a real estate example when trying to explain moving averages to people — “think of buying a house in a neighborhood in which the average home price has been dropping…” — but I like this analogy as well. Everything I bolded above directly relates to investing. You’ll have all kinds of fluctuations but as long as your stock stays on the correct side of the moving average there’s no need to panic. Of course, in the example above if a stock was your weight you’d be short… betting that the stock was going to drop and thus you’d want it to stay under the declining moving average.