EMA is an exponential moving average, its use in cryptocurrency trading.
EMA (Exponential Moving Average) is an exponential moving average, which is a tool that performs technical analysis. It helps to control the price of an asset or investment for a specific period of time. EMA, unlike SMA and other types of moving averages, focuses on recent price data and is used by traders to track price trends in the cryptocurrency and asset markets.
Each moving average differs from the other in the accuracy of the forecast. Unlike the others, the EMA shows data better and earlier, reacting to changes than the simple moving average (SMA), nevertheless worse than the weighted moving average (WMA), predicts sharp rises and falls of the chart.
But the most important difference between the exponential moving average and the others is the different "weight" of candlesticks, which completely depends on time. The candle shows how the price of an asset has changed over a specific time period. On the graph, they are indicated as vertical rectangles with vertical lines at the top or bottom. The last quarter will have the maximum weight, and the first one will have the minimum.
The effectiveness of the use of EMA for earningsMost investors consider moving averages not the best forecasting tools, and exponential moving averages too, believing that they show changes on the stock exchange irrelevant.
Just in order to reduce the impact of delayed factors, the EMA indicator was created. It is very sensitive to any changes in the data that are used in the calculation. Also, due to the fact that the EMA prefers new information rather than information for all time, the results of the exponential moving average come out much more accurate and timely. Experienced investors understand this and actively use it in order to make a profit.
Features, nuances and advantages of using EMAIn fact, EMA is an improved version of SMA:
she simply attaches more importance to the latest information and uses them in the formula. It is thanks to the use of new data that the accuracy of the exponential moving average is much higher than the SMA. The calculation is made according to the formula, but since it is quite problematic and long to do all these calculations independently, many resources have been created to automate this process, including EMA integrated into the GRIN4 ecosystem. The system immediately calculates the EMA and displays the moving average on the chart in a ready-made form.
The advantages of using EMA include:
· clarity and ease of use, accessibility for understanding and use even by novice traders with a minimal set of knowledge;
· increased accuracy by taking into account the latest data;
· quick and timely response to any changes;
· the ability to accurately determine the direction of the market and identify the flat.
With such a tool, it is not so difficult to learn how to invest and understand cryptocurrency trading. Also, to increase the effectiveness of the indicator, more advanced traders use it with others. EMA is well complemented by trend indicators and oscillators. The use of several tools at once allows you to avoid any false signals and for sure find out where to enter the market. There are quite a lot of different strategies for using several indicators at once. The ability to use all of them significantly increases the chances of a trader to profit from trading.