Exponential Moving Average (EMA)

What it is:

An exponential moving average (EMA) is a moving average for time-series data which places greater weight on more recent data.

How it works/Example:

An exponential moving average places exponentially greater weight on data in a time series as the data becomes more recent. For instance, in a 10-day price chart for a given security, the prices on the ninth and tenth days will be weighted more heavily as components of the average.

Why it matters:

Since an EMA is weighted more heavily on recent data, it is more sensitive to daily price fluctuations. For this reason, instances of high volatility result in volatile moving averages.

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Submitted by Anonymous on Thu, 06/06/2019 - 07:25

Exponential Moving Average (EMA)

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