What Is Exponential Moving Average (EMA)?
Cryptocurrency trading requires logical patience and willingness to learn new things. Developing a profitable trading strategy demands knowledge of all the relevant trading tools users can leverage. Here we shall explore one of such tools, the Exponential Moving Average (EMA), a trading indicator.
The exponential moving average (EMA) is a weighted moving average (WMA) that gives more preference to recent price data. Unlike the Simple moving average (SMA), the EMA is updated with the latest price movements in the market. EMA also response faster to recent price changes than SMA.
The formula used for calculating EMA involves a multiplier, a factor when changed causes subsequent changes in other related variables. Calculating EMA starts with the SMA. SMA is given by the sum of the asset closing prices divided by time periods passed. The 10-day SMA of an asset equals the sum of closing prices for the past 10 days is divided by 10.