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Exponential Moving Average

The Exponential Moving Average indicator (EMA) is used to reduce the lagging on the simple Moving Average. This is achieved by applying more weight to recent prices relative to older prices. With weighting applied the Exponential Moving Average will react quicker to recent price changes compared to a simple Moving Average.


A very useful application of Moving Average indicators is on Mean Reversion strategies where the objective is to identify an outlier event and trade the price action back to the Mean.


The price crossing the Moving Average can also be very useful for identifying the end of a long directional price move. However it should be noted, that given the lagging nature of the indicator it is not very effective during periods of sideways trading.


Exponential Moving Average Formula

The calculation of the Exponential Moving Average is based on a percentage of the current interval value plus previous Moving Average multiplied by weighted value that depends on the number of periods Failed to parse (MathML with SVG or PNG fallback (recommended for modern browsers and accessibility tools): Invalid response ("Math extension cannot connect to Restbase.") from server "https://api.formulasearchengine.com/v1/":): {\displaystyle n} being used to calculate the value.


The following formula is used to calculate the weighting:

Failed to parse (MathML with SVG or PNG fallback (recommended for modern browsers and accessibility tools): Invalid response ("Math extension cannot connect to Restbase.") from server "https://api.formulasearchengine.com/v1/":): {\displaystyle \text{Weighting} = \displaystyle \frac { 2 } { n + 1 } }


Failed to parse (MathML with SVG or PNG fallback (recommended for modern browsers and accessibility tools): Invalid response ("Math extension cannot connect to Restbase.") from server "https://api.formulasearchengine.com/v1/":): {\displaystyle \text{Exponential Moving Average} = \displaystyle (\text{CLOSE } * \text{ Weighting}) + \left ( \text{Previous Exponential Moving Average } * (1 - \text{ Weighting}) \right ) }


For example, if the number of periods Failed to parse (MathML with SVG or PNG fallback (recommended for modern browsers and accessibility tools): Invalid response ("Math extension cannot connect to Restbase.") from server "https://api.formulasearchengine.com/v1/":): {\displaystyle n} being used to calculate the Exponential Moving Average is 9, then 20% weighting would be applied to the current Close price and 80% weighting applied to the previous Exponential Moving Average value.


Exponential Moving Average Indicator

The Exponential Moving Average indicator can be displayed on the TimeToTrade charts. To add the Exponential Moving Average indicator to the TimeToTrade charts, go to the chart settings and click on the 'Add Indicator' button. Click on the search box and type the name of the indicator that you are looking for, or for example type Exponential Moving Average and scroll through the results:


Generic Indicator Settings 1.png


After adding the Exponential Moving Average indicator, within the chart settings, click on it to set the parameters and change colours.



Exponential Moving Average Alerts

Alerts can be set up to provide an Email or SMS text message notification of when your Exponential Moving Average indicator chart conditions have been met, backtest trading strategies or execute demo trades. To learn more:



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The information and data provided is for educational and informational purposes only. Interpretation and use of the information and data provided is at the user's own risk. All information and data on this website is obtained from sources believed to be accurate and reliable. However, errors or omissions are possible due to human and/or mechanical error. All information and data is provided "as is" without warranty of any kind. We make no representations as to the accuracy, completeness, or timeliness of the information and data on this site and we reserve the right, in its sole discretion and without any obligation, to change, make improvements to, or correct any errors or omissions in any portion of the services at any times. Past performance is not a guarantee of future results. Trading carries a high level of risk to your capital and can result in losses that exceed your deposits. It may not be suitable for everyone so please ensure you fully understand the risks involved.


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