There are three steps involved when calculating EMA: Exponential Moving Average Indicator (EMA)–ĮMA is the other type of moving average that gives more weight to the most recent price points and makes it more responsive to recent data points.ĮMA is more responsive to recent price change when compared to the SMA as it applies the same weight to all price changes in the given specific period. The SMA of the last 9 periods of Nifty 50 is plotted as a line on the price charts as shown below:Ģ. The closing prices for the last five days are as follows: Rs.23, Rs.23.40, Rs.23.20, Rs.24, and Rs.25.50. Traders use this indicator for determining buy, sell signals for securities and also helps to identify support and resistance zones.įor example, a stock trader wants to calculate the simple moving average for a stock by taking its closing price for the last five days. The SMA indicator is used for traders to generate signals of when to enter or exit the stock.Īn SMA is a lagging indicator as it is based on the past price data for a given period that can be computed for different types of prices such as high, low, open, and close. The SMA Is the simplest moving average that is obtained by adding the most recent data points set and then dividing the total by the number of time periods.

Linear Regression (or) Least square Moving Averages Indicator-īelow are 6 Types of Moving Averages that traders use when trading in the stock market: 1.

The Triple Exponential Moving Average Indicator (TEMA). Double Exponential Moving Average Indicator (DEMA). Exponential Moving Average Indicator (EMA).

Trading moving averages