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    Exponential Moving Average

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    Azizah Noor
    Critics argue, Simple Moving Average is too simple because it gives equal weight to each data. To solve this problem, made Exponential Moving Average (EMA), which gives greater weight to recent data in calculating the moving average. The following shows the calculation results of Exponential Moving Average on Eastman Kodak stock.

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    Exponential Moving Average

    Uploaded by

    Azizah Noor
    151 views12 pages
    Critics argue, Simple Moving Average is too simple because it gives equal weight to each data. To solve this problem, made Exponential Moving Average (EMA), which gives greater weight to recent data in calculating the moving average. The following shows the calculation results of Exponential Moving Average on Eastman Kodak stock.

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    Critics argue, Simple Moving Average is too simple because it gives equal weight to each data. To solve this problem, made Exponential Moving Average (EMA), which gives greater weight to recent data in calculating the moving average. The following shows the calculation results of Exponential Moving Average on Eastman Kodak stock.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    151 views12 pages

    Exponential Moving Average

    Uploaded by

    Azizah Noor
    Critics argue, Simple Moving Average is too simple because it gives equal weight to each data. To solve this problem, made Exponential Moving Average (EMA), which gives greater weight to recent data in calculating the moving average. The following shows the calculation results of Exponential Moving Average on Eastman Kodak stock.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    of 12

    STOCK EXCHANGE MATHEMATICS

    NOOR AZIZAH

    5/19/2012

    EXPONENTIAL MOVING AVERAGE

    Critics argue, Simple Moving Average is too simple because it gives equal weight to each data. They view the most recent data should be given greater weight in the formula because it is more relevant to the future price movements. To solve this problem, made Exponential Moving Average (EMA), which gives greater weight to recent data in calculating the moving average.

    5/19/2012

    EXPONENTIAL MOVING AVERAGE

    5/19/2012

    EXPONENTIAL MOVING AVERAGE

    The formula to calculate an exponential moving average is as follows:

    The coefficients represents the degree of weighting decrease, a constant smoothing factor between 0 and 1. A higher discounts older observations faster. Alternatively, may be expressed in terms of N time periods, where = 2/(N+1).

    5/19/2012

    EXPONENTIAL MOVING AVERAGE

    The following shows the calculation results of exponential moving average on Eastman Kodak stock. For the first period EMA, the calculation is used as a simple moving average of the previous period EMA (yellow block to the period-10). Of period-11 forward, the next period of the previous EMA will be used in the calculations. The calculation of the period-11 broken down as follows:

    5/19/2012

    EXPONENTIAL MOVING AVERAGE

    Example, table:

    5/19/2012

    EXPONENTIAL MOVING AVERAGE

    Example, graphic:

    5/19/2012

    EXPONENTIAL MOVING AVERAGE

    The difference between SMA and EMA

    For this example, which uses only 20 days of the data market, the difference is minimal, although still distinct. Exponential moving average is consistently closer to the actual price. On average, closer EMA 3/8 points to the actual price of the SMA.

    5/19/2012

    EXPONENTIAL MOVING AVERAGE

    5/19/2012

    EXPONENTIAL MOVING AVERAGE

    Simple Moving Average

    Exponential Moving Average Move quickly and well to show the latest price changes. More prone to get a false signal

    Pro

    Featuring subtle graphics that eliminates false signals. Moving slowly, which can lead to signal late in the buying and selling

    Kontra

    5/19/2012

    EXPONENTIAL MOVING AVERAGE

    THANK YOU

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