Exponential moving average (EMA)
An average that weights recent prices more, fading older ones geometrically.
Formula
EMA = EMAₚᵣₑᵥ + k × (Price − EMAₚᵣₑᵥ), k = 2 ÷ (N + 1)
How to read it
Read like an SMA, but it turns sooner.
How to use it
Reacts faster than an SMA of the same length; the building block of MACD, DEMA, TEMA and Keltner channels.
Limitations
Faster also means more false turns in a sideways market.
In Kereon
Charts · Superchart. Default length 21. Seeded with the simple average of the first N prices — the standard definition — rather than the first price, which would distort a long EMA for months of bars.
Also called: exponential average, ema.