What is Exponential Moving Average?
The Exponential Moving Average is one of the types of moving averages. this indicator calculates the average of a security price over a certain period of time unlike Simple Moving Average this indicator is based on the most recent price data and is more reliable than Simple Moving Average.
Traders use this indicator to identify upcoming trends, direction, and strength of a security price. the calculation of EMA is a bit complicated firstly, you need to calculate the Simple Moving Average second compute the multiplier and lastly the Exponential moving average.
How to configure Exponential Moving Average on Expert Option?
To configure the Exponential Moving Average (EMA) on Expert Option, => firstly, log in to your account and select the asset you want to trade. => Once you have chosen the asset, look for the “Indicators” button located in the bottom left corner of the chart. => Click on this button to access the list of available indicators. => In the search bar, type “EMA” to quickly locate the Exponential Moving Average indicator. => Click on the EMA indicator to select it, and a new window will appear, allowing you to customize the settings. => Here, you can choose the period length and the colour of the line. => Once you have set the EMA according to your preferences, click “Apply” to add it to your chart. => You can now use this indicator to analyze the asset’s price movements and make informed trading decisions.
How to Trade Exponential Moving Average on Expert Option?
There are two ways of trading with an Exponential Moving Average, you can trade with an indicator using a Single EMA or the combination of two EMA.
Period 21 is considered best while trading with a single EMA. It does not matter if you are an intraday trader or a swing trader. trading with a single Exponential Moving Average is very easy when the indicator line and security price intersects each other it generates buy and sell signals.
Best time to place a buy trade
- When the indicator line intersects the price from the bottom.
- Secondly, the line ladder up above the price.
- Thirdly, It stays above the price for a long it is the best time to buy trade.
Best time to place sell trade
- When the indicator intersects the price from the top.
- Secondly, the line ladders down below the price.
- Thirdly, It stays below the price for a good duration it is the best time to place a sell trade.
Method 2: Exponential moving average crossover strategy
As said above, There are two ways of trading with an Exponential Moving Average one of them is using the combination of two EMAs. In order to add two EMA on the chart. firstly, click on the indicator button and click on the moving average twice and set the period of the same to 15 and 31.
Best time to place a buy trade
- When line 15 intersects line 31 from the bottom
- Secondly, line 15 ladders up above the same.
- Lastly, It stays above line 31 for a long duration is the best time to place a buy trade.
Best time to place a sell trade
- Similarly, when line 15 intersects line 31 from the top
- Secondly, line 15 ladders down below line 31.
- Lastly, It stays below line 31 for a long duration is the best time to place a sell trade.
Exponential Moving Average (EMA) is one of the widely used technical analysis indicator in trading. It is designed to help traders identify trends and potential trading opportunities by smoothing out price fluctuations over a given period. There are two ways of trading with an Exponential Moving Average, you can trade with an indicator using a Single EMA or the combination of two EMA.
I hope you have found the article useful and that I am able to clear your doubts regarding the Exponential Moving Average. I am happy to help you again, as this is my target to provide you with as much knowledge as I can. Try the above trading strategy on Expert Option demo account.