V.9:10 (391-395): SIDEBAR: EXPONENTIAL MOVING AVERAGES
Product Description
EXPONENTIAL MOVING AVERAGES
Defining exponentially smoothed moving averages — which, for most traders, would be a series of closing prices — is simply another form of a moving average. An exponentially smoothed moving average utilizes a smoothing constant (a) that approximates the number of days for a simple moving average. This constant is multiplied times the difference between today's closing price and yesterday's moving average value. This new value is then added to yesterday's moving average value (Figure 1):
Defining exponentially smoothed moving averages — which, for most traders, would be a series of closing prices — is simply another form of a moving average. An exponentially smoothed moving average utilizes a smoothing constant (a) that approximates the number of days for a simple moving average. This constant is multiplied times the difference between today's closing price and yesterday's moving average value. This new value is then added to yesterday's moving average value (Figure 1):
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