5 EMAS concept behind exchange system

What is Emma? 5 EMAS concept behind exchange system

There is a concept in forex trading and trade in general used as an indicator by many forex traders. This widely used concept is that the "moving average". It is used in the field of finance and specially with technical analysis. It belongs to the family of very similar statistical techniques widely used to analyze time series data.

You can calculate the moving average for each time series, but in our case we are most concerned about this average is calculated over a pair of currency prices over time. The average quantity r can bee seen as smoothed representation of the current market activity and trend indicator affect market behavior. Thus highlighting the long-term trends or cycles. The boundary between short and long term depends on the market will be monitored and the parameters of moving average should be set accordingly.

There are three main types of moving averages. Simple moving average, weighted moving average and exponential moving averages. They range on average, but differ on how much time is counted for the final value of the indicator.

In the case of exponential Moving Average (EMA), which is also called exponentially weighted moving Average (EWMA) Sometimes, in the calculation of the formula is applied weight factors that decrease exponentially. What this means is that more weight (importance) is given the latest data.

From this definition we can conclude that the exponential moving average reacts faster to recent price changes than a simple moving average. On 12 and 26 are the most popular day EMAS term averages. In general, 50 - and 200-day EMAS used as signals for long-term trends.