Exponential Moving Averages

Although a simple moving average is easy to calculate, it doesn't necessarily give the best picture of how prices have been changing. The Exponential Moving Average is another moving average, similar to the simple moving average, but is calculated in a different way.

What makes the EMA different from the SMA is that the EMA puts more weight on prices that are closer to the current period. The result of putting more weight on more recent periods gives you a moving average that is less "smooth". As a result, the EMA reacts quicker to price changes than the SMA.