EMA is used in technical analysis to show the trend of a stock or future or whatever the underlying security. The figures after EMA, such as EMA11 or EMA50 pertains to the number of days for which the moving average is calculated. The higher the number, the slower reaction on the trend.
Exponential Moving Average shows the average value of the underlying data, most often the price of a security, for a given time period, attributing more weight to the latest changes and less to the changes that lie further away.
Exponential Moving average is together with its simple counterpart (MA) considered to be one of the most common Indicators in nearly any technical analysis software available in the market today. It’s a trend following indicator and is calculated like so:
EMA = Price(t) * k + EMA(y) * (1 – k)
t = today, y = yesterday, N = number of days in EMA, k = 2/(N+1)
For a complete walkthrough of how to calculate an EMA, see our EMA-walkthrough.
Exponential Moving Average is a trend following indicator.