The EMA puts more weight on recent
price action. As a rule, EMAs calculated over shorter periods will follow
the price line more closely than longer periods. A 10-period EMA will follow
the price line more closely than a 20-period EMA, particularly when the
price action is volatile.
The default EMA is the closing price
during the last 20 trading periods (minutes/hours/days/weeks/months, based
on the selected frequency).
In order to calculate EMA, first
determine the exponent:
Exponent
= 2 / (Number of Periods + 1)Note: The Exponent for a 20-period MA is
0.0952 [or 2 / (20 + 1)]
Then
calculate the EMA:
EMA
= (Today's close × Exponent) + (previous EMA × (1 - Exponent))
For the
20-period EMA example,
EMA
= (Today's close × 0.0952) + (previous EMA × (1 - 0.0952))
We presently are using a EMA of (20)
and (10) as shown in the below chart.
We also have been using EMA 9 and 30
to indicate the price move for scalping.You wait for the cross to happen and
the candle close below or above the EMA to place your trade.
