What is exponential moving average in forex

As we said in the previous lesson, simple moving averages can be distorted by spikes. Well, what if there was a news report on Day 2 that causes the euro to drop across the board. The result of the simple moving average would be a lot lower and it would give you the notion that the price was actually going down, when in reality, Day 2 was just a one-time event caused by the poor results of an economic report.

Hmm… Wait a minute… Yep, there is a way! In our example above, the EMA would put more weight on the prices of the most forex moving average scalping strategy days, which would be Days 3, 4, and 5.

If you think about it, this makes a lot of sense because what this what is exponential moving average in forex is it puts more emphasis on what traders are doing recently. Notice how the red line the 30 EMA seems to be closer price than the blue line the 30 SMA.

Moving Averages

This means that it more accurately represents recent price action. You can probably guess why this happens. When trading, it is far more important to see what traders are doing NOW rather what they were doing last week or last month.

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Exponential Moving Average (EMA)

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