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Exponential moving average (EMA)

Weighted moving average that gives recent bars exponentially more weight.

The exponential moving average (EMA) is a recursive average that updates by blending today's close into yesterday's EMA via a smoothing factor α = 2 / (N + 1). Older observations decay exponentially rather than dropping off a fixed window, so the EMA reacts faster to new price action than the equivalent-length SMA.

EMAs are the building block for many other indicators: MACD is the difference of two EMAs, the signal line is an EMA of MACD, and many strategies use a 9 / 21 / 50 EMA stack to gauge short- vs. medium-term trend.

The trade-off versus SMA: faster response in trending markets, but more whipsaws in chop. The smoothing factor α is unitless — the same EMA(20) on 1-minute bars and on daily bars uses the same recursion.

Formel

EMA_t = α · P_t + (1 - α) · EMA_{t-1},  where  α = 2 / (N + 1)

Beispiel

For N = 10, α = 2 / 11 ≈ 0.1818. If yesterday's EMA was 100 and today's close is 110, today's EMA = 0.1818 · 110 + 0.8182 · 100 ≈ 101.82.

Wie Noon Barbari Exponential moving average (EMA) nutzt

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