How To Use Exponential Moving Average (EMA)

Learn How To Use Exponential Moving Average (EMA)

As part of our new technical indicator offerings, we have now integrated support for 4 Exponential Moving Average (EMA) periods. You can now build EMA8, EMA12, EMA26 and EMA55 into your strategies, giving you a greater degree of customizability for your rules.

EMAs are a type of moving average that places a greater weight and significance on the most recent data points. The  exponential moving average  is also referred to as the exponentially  weighted moving average . They react more significantly to recent price changes than a  simple moving average , which applies an equal weight to all observations in the period. Similar to Moving Average crossings, EMA crossings can provide important signals for traders. For example, if a fast period Exponential Moving Average (e.g. EMA8) crosses above a slower period Average (e.g. MA55) it can act as a buy signal for a trader:

Intuitively, when the fast period EMA crosses below the slower period EMA, it can act as a signal to close a position or open a short position.

​Formula used to calculate EMA on Coinrule

EMA = (price - emaData[idx]) *k + emaData[idx]

​Smoothing = 2

k = smoothing divided by (length of the candle + 1)

EMA[idx] is the candles data feed we get from the exchange

Pre-built Templates using EMA can be found in our Template Library by seraching 'EMA' here:

The template library features a 'Short Selling EMA Cross with Trailing Stop Loss' strategy. This short selling strategy works best in periods of downtrends and bearish market conditions. This strategy comes with a trailing stop loss which allows the strategy to capitalise on strong gains and helps protect your profits.

We hope you enjoy the new indicator. Happy trading!