Interestingly, the EMA of the open and the close are almost identical.īut the most commonly used price point is the close.
Here's what it looks like when I put the open, high, low and close EMAs on the same chart. You can also use the the open, high or low, instead of the close, to calculate the EMA. This is why I prefer to use the EMA…most of the time. Chart by TradingViewĪs you can see, the EMA stays closer to the current price than the SMA does. Here's how that looks on a EURUSD daily chart.
The number in the bottom right corner is the average of the closes from the last 10 days.Īn EMA does something similar, but it gives more weight to the closing price of the most recent candle. Here's what it would look like in a spreadsheet. MA (10) The Difference Between an Exponential Moving Average and a Simple Moving AverageĪ Simple Moving Average (SMA) takes the sum all of the closes in the range and divides that number by the number of candles in the range, which is 10, in the example above. When you're trading, you'll often see the number of candles used in the calculation in parenthesis. On a hourly chart, it would be the average of the closing prices of the last 10 hours. So on a daily chart, the current moving average value would be the average of the closing prices of the previous 10 days. RELATED: The Best Trading Psychology Books of All-Time
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