DEFINITION of 'Exponential Moving Average  EMA'
A type of moving average that is similar to a simple moving average, except that more weight is given to the latest data. The exponential moving average is also known as "exponentially weighted moving average".
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BREAKING DOWN 'Exponential Moving Average  EMA'
This type of moving average reacts faster to recent price changes than a simple moving average. The 12 and 26day EMAs are the most popular shortterm averages, and they are used to create indicators like the moving average convergence divergence (MACD) and the percentage price oscillator (PPO). In general, the 50 and 200day EMAs are used as signals of longterm trends.
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