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".
INVESTOPEDIA EXPLAINS '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.
VIDEO
Loading the player...
RELATED TERMS

Moving Average  MA
A widely used indicator in technical analysis that helps smooth ... 
Stick Sandwich
A technical trading pattern in which three candlesticks form ... 
Triple Exponential Average  TRIX
A momentum indicator used by technical traders that shows the ... 
Double Exponential Moving Average ...
A technical indicator developed by Patrick Mulloy that first ... 
Simple Moving Average  SMA
A simple, or arithmetic, moving average that is calculated by ... 
Moving Average Convergence Divergence ...
A trendfollowing momentum indicator that shows the relationship ...
RELATED FAQS

What is the difference between a simple moving and an exponential moving average?
Simple moving averages (SMAs) and exponential moving averages (EMAs) are technical indicators used to track the price of ... Read Full Answer >> 
How can the exponential moving average be used in swing trading?
The exponential moving average (EMA) is a variation of the simple moving average that places more emphasis on the latest ... Read Full Answer >> 
Are exponential moving averages more effective than simple or weighted moving averages?
An exponential moving average (EMA) uses an exponentially weighted multiplier to give more weight to recent prices, which ... Read Full Answer >> 
What are the most popular volume oscillators in technical analysis?
The most popular volume oscillators in technical analysis are the Percentage Volume Oscillator, or PVO, and the Chaikin Oscillator. ... Read Full Answer >> 
What are the best technical indicators to complement the Ultimate Oscillator?
Technical indicators used to complement the Ultimate Oscillator include candlestick patterns and moving averages. Developed ... Read Full Answer >> 
What are the best technical indicators to complement a Turtle Channel?
The best technical indicators to complement the turtle channel are the moving average convergence divergence (MACD) and an ... Read Full Answer >> 
How is standard deviation used to determine volatility?
Though standard deviations can be a useful tool for measuring volatility in numerous financial arenas, including accounting ... Read Full Answer >> 
What is the difference between standard deviation and mean?
Understanding the calculation and interpretation of mathematical fundamentals such as mean and standard deviation is essential ... Read Full Answer >> 
What are the main advantages and disadvantages of using a Simple Moving Average (SMA)?
Although traders and analysts may argue over which is more effective, a simple moving average (SMA) or an exponential moving ... Read Full Answer >> 
What are the best technical indicators that complement the Relative Strength Index ...
Some of the best technical indicators to complement using the relative strength index (RSI) are other momentum indicators, ... Read Full Answer >> 
How do I build a profitable strategy when spotting an Sanku (Three Gaps) Pattern ...
A trading strategy that can be used when a trader recognizes a sanku pattern seeks to profit from a market reversal. The ... Read Full Answer >> 
What is a common strategy traders implement when using the Polarized Fractal Efficiency ...
A common strategy used with the polarized fractal efficiency (PFE) indicator is to initiate trades that anticipate a market ... Read Full Answer >> 
What are the most common momentum oscillators used in forex trading?
Two of the most commonly used technical indicators of momentum in forex trading are the moving average convergence divergence, ... Read Full Answer >> 
What is the Double Exponential Moving Average (DEMA) formula and how is it calculated?
Double exponential moving average, or DEMA, is a measure of a security's trending average price that gives the most weight ... Read Full Answer >> 
How do I use McClellan Oscillator for creating a forex trading strategy?
The McClellan oscillator can be used in combination with additional exponential moving averages (EMA) to create a basic trend ... Read Full Answer >> 
What are the best technical indicators to complement the Mass Index?
The best technical indicators to complement a trading strategy using the mass index are exponential moving averages (EMAs) ... Read Full Answer >> 
What is a common strategy traders implement when using the Negative Volume Index ...
A common strategy traders implement using the negative volume index (NVI) is to use it to help obtain a more optimal trade ... Read Full Answer >> 
How do I use a Moving Average Ribbon for creating a forex trading strategy?
The moving average ribbon can be used to create a basic forex trading strategy based on a slow transition of trend change. ... Read Full Answer >> 
How do I construct a Moving Ribbon strategy?
Moving average ribbon strategies focus on the intertemporal relationships between shorter and longer price trends. Traders ... Read Full Answer >> 
What are the best technical indicators to complement the McClellan Oscillator?
The types of indicators that most naturally complement the McClellan Oscillator are those that also complement other forms ... Read Full Answer >> 
How do I use The Force Index for creating a forex trading strategy?
The force index can be used to measure the strength of price movements in any market, forex or otherwise. To calculate and ... Read Full Answer >> 
How do I use Guppy Multiple Moving Average (GMMA) to create a forex trading strategy?
Forex trading is notably more shortterm focused and volatile than markets for other securities, and any applied technical ... Read Full Answer >> 
Why is the Guppy Multiple Moving Average (GMMA) important for traders and analysts?
Traders look to time changes in stocks or securities to collect a series of profits. Investors operate with more of a buy ... Read Full Answer >> 
What is the Guppy Multiple Moving Average (GMMA) formula and how is it calculated?
Named after Australian trader Daryl Guppy, the Guppy multiple moving average (GMMA) indicator is a technical tool built on ... Read Full Answer >> 
What is a common strategy traders implement when using the Exponential Moving Average ...
A common strategy traders use to exploit the exponential moving average (EMA) indicator is the moving average bounce. In ... Read Full Answer >> 
What are the best technical indicators to complement the Force Index?
The force index is an oscillator that generates trading signals by producing a value that fluctuates around a center value ... Read Full Answer >> 
Why is the ElderRay Index important for traders and analysts?
Dr. Alexander Elder created the ElderRay index as a way to assess the current buying and selling influences in the market. ... Read Full Answer >> 
How do I use ElderRay Index for creating a forex trading strategy?
The ElderRay index can be used to create a forex trading strategy for critical market turning points where a market reversal ... Read Full Answer >> 
What are common strategies traders implement when using the Demarker Indicator?
The DeMark indicator is predominantly applied as a secondary tool of technical analysis. Traders and analysts use the DeMark ... Read Full Answer >> 
How is the Average Directional Index (ADX) calculated and what is the formula?
The average directional index, or ADX, is the primary indicator of a technical trading system comprised of five technical ... Read Full Answer >> 
What is the Directional Movement Index (DMI) formula and how is it calculated?
Legendary trader and author J. Welles Wilder Jr. introduced the directional movement index, or DMI, in 1978. Wilder wanted ... Read Full Answer >> 
What is the disparity index formula and how is it calculated?
Steve Nison introduced the disparity index in his book, "Beyond Candlesticks," as a way to analyze price movements in candlestick ... Read Full Answer >> 
What is the difference between a simple moving average and an exponential moving ...
The only difference between these two types of moving average is the sensitivity each one shows to changes in the data used ... Read Full Answer >>
Related Articles

Active Trading
Using The Force Index For Short and MediumTerm Trading
Here are the guidelines for making trading decisions using the force index in both a short and intermediate perspective. 
Forex Education
Trading The MACD Divergence
Currency traders can use this method to avoid stoporder triggers before the real reversal. 
Technical Indicators
Discovering Keltner Channels and the Chaikin Oscillator
It's time to acquaint yourself with some lesserknown yet effective technical indicators. 
Active Trading Fundamentals
Weighted Moving Averages: The Basics
We take a closer look at the linearly weighted moving average and the exponentially smoothed moving average. 
Active Trading
Advantages of TRIX  Triple Exponential Average
This powerful tool not only filtrates market noise but also tends to be a leading rather than lagging indicator. 
Forex Education
The 5Minute Forex "Momo" Trade
Learn this simple momentum strategy and its profit protecting exit rules. 
Forex Education
Simple Vs. Exponential Moving Averages
These technical indicators help investors to visualize trends by smoothing out price movements. 
Active Trading
Candle Sheds More Light Than The MACD
Read the case against this wellestablished indicator. 
Fundamental Analysis
Exploring The Exponentially Weighted Moving Average
Learn how to calculate a metric that improves on simple variance. 
Forex Education
Moving Average Bounce
Find out how this simple trading strategy can be added into your trading arsenal.