Exponential Moving Average (EMA) is a weighted approach derived from Simple Moving Average (SMA). EMA gives more weight to more recent price data, with the core concept that the more recent the data is, the higher the value it should have. In contrast, SMA gives equal weight throughout the averages, regardless of time relevancy. Using a longer time period for moving averages indicates long-term trends; short time frame periods indicate short term trends.

StockHero EMA: a buy signal is generated when the short-term EMA crosses above the long-term EMA; a sell signal is generated when the short-term EMA crosses below the long-term EMA.

A rising EMA suggests an upward trend, and a falling MA indicates a downtrend. EMA Crossing is a crossover signal created when two different time period EMAs crossover in a chart. A bullish crossover happens when the short-term MA (blue) crosses above a long-term one (red), suggesting the start of an upward trend. In contrast, a bearish crossover happens when a short-term MA crosses below a long-term moving average, which indicates the beginning of a downtrend.

SMA = ( Sum (Price, n) ) / n    
EMA = ( P - EMAp ) * K + EMAp

P = Price
EMAp = the Exponential moving Average for the previous period
K = 2 / (n + 1), the smoothing constant
n = Time Period

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