This is the third article in our EMA series. The EMA was designed to smooth out the effects of price volatility and create a clearer picture of changing price trends. Traders use an EMA, sometimes in concert with another EMA for a different period, to signal confirmation of a change in price behavior.

Simple Vs. Exponential Moving Averages

The benefit of the EMA indicator is its visual simplicity. Traders can quickly assess the prevailing trend of price behavior from the direction of the EMA.

Simple vs. Exponential Moving Averages - umisifuy.web.fc2.com

Care must be taken since the EMA is a lagging indicator and may not adjust rapidly to volatility in the market. An EMA works well in strong trending markets, but tends to give false and erratic signals in ranging or sideways markets. Shorter period settings can lead to false signals, too. The following trading system is for educational gt binary options only.

Technical analysis takes previous pricing behavior and attempts to forecast future prices, but, as we have all heard before, past results are no guarantee of future forex moving average simple or exponential. Using the EMA in combination with another technical indicator is also always highly recommended. That concludes our series on the EMA Indicator. For further reading please visit our Forex indicators section.

Simple Moving Average versus Exponential Moving Average

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