EMA — Exponential Moving Average

Also known as: Exponential Moving Average, Exponential MA

Moving average that weights recent prices more heavily than older ones. Reacts faster than SMA.

Formula

\mathrm{EMA}_t = \alpha \cdot P_t + (1 - \alpha) \cdot \mathrm{EMA}_{t-1}, \quad \alpha = \frac{2}{N+1}

Where $N$ is the length (e.g. 20, 50, 200) and $P_t$ is the current price.

How to use it

Price above rising EMA 50 / 200 → bull trend context.
Price below falling EMA 50 / 200 → bear trend context.
Pullbacks to EMA 20 / 50 in a strong trend often offer entries.
Golden Cross (EMA 50 crosses above EMA 200) — bullish macro signal.
Death Cross (EMA 50 crosses below EMA 200) — bearish macro signal.

Limits

EMAs lag — they tell you what has been. In sideways markets, they whipsaw badly. Combine with RSI or MACD for confirmation.

Frequently asked

What's the difference between EMA and SMA?

SMA gives every price in the window equal weight. EMA gives more weight to recent prices, so it responds faster to trend changes but is also more whippy.

Which EMAs are «standard»?

Traders most often use EMA 20 and 50 for trend, EMA 100 and 200 for macro context. 50/200 crosses are famous (Golden Cross / Death Cross).