Exponential Moving Average, also EMA is a trend analysis tool which works with the same principles as SMA. Calculations for both Exponential Moving Average and the Simple Moving Average use the same formulas.
However, there is more to EMA than SMA (Simple Moving Average).
EMA put more emphasis on the most recent periods/prices.
And this makes it a better indicator to filter unnecessary spikes because it gives you accurate prices and trends in real time.
Check the example below.
The EMA line is close to the price than the SMA is.
You know what that means?
You can make accurate predictions with SMA than you will with SMA.
How to set the Exponential Moving Average line in Olymp Trade.
Login to your Olymp Trade account. Or register if you don’t already have an account.
Find the indicator button in your chart .
Looks like this: –
Now click on EMA
This is the EMA
How to Read EMA signals in Olymp Trade
It is recommended that when you set the EMA line in Olymp Trade, you leave it to its standard settings.
You can however change the color and thickness of your lines as you wish.
The basic principle of trading with the EMA is to trade on the direction of a trend.
To use this indicator in opening profitable trades, try to make a forecast when you notice a reversal in the asset price.
In practice, you will be looking for anything that looks like this to open your trade upwards.
Or a signal like this for a downward trend