- What is alpha in Exponential Moving Average?
- How do you calculate alpha for EMA?
- What is an Exponential Moving Average?
- How do you interpret exponential moving averages?
What is alpha in Exponential Moving Average?
Alpha = The weight decided by the user. r = Value of the series in the current period.
How do you calculate alpha for EMA?
An N-day exponential moving average (EMA) is a weighted average of today's close and the preceding EMA value. The weight for today's close is a smoothing factor alpha, where alpha=2/(N+1).
What is an Exponential Moving Average?
Exponential Moving Average (EMA) is similar to Simple Moving Average (SMA), measuring trend direction over a period of time. However, whereas SMA simply calculates an average of price data, EMA applies more weight to data that is more current.
How do you interpret exponential moving averages?
Investors tend to interpret a rising EMA as a support to price action and a falling EMA as a resistance. With that interpretation, investors look to buy when the price is near the rising EMA and sell when the price is near the falling EMA.