British Airways shares traded (million)

Use this diagram to show how exponential smoothing can provide smoothed values up to the end of the series.

In the first example (with no pronounced trend), exponential smoothing works well. A smoothing constant of about 0.25 works well.

Click on values to see which of the original values contribute to any smoothed value — the darker the green, the greater the influence.

However in the second example, there is a pronounced linear trend. As the exponential smoothing constant is decreased, the smoothed series is systematically too low.

Do not use exponential smoothing on a time series with trend.

You could mention that there are modified versions of exponential smoothing that do work in the presence of trend.

The first data set gives the volume of British Airways shares traded in the first 57 trading days of 2002 — between 2nd January and 21st March.

The second example gives the total world rice production each year from 1961 to 2001.