{"id":898,"date":"2009-11-14T12:45:57","date_gmt":"2009-11-14T07:15:57","guid":{"rendered":"http:\/\/www.niftylivecharts.com\/blog\/?p=898"},"modified":"2009-11-14T13:18:01","modified_gmt":"2009-11-14T07:48:01","slug":"which-is-better-simple-moving-average-or-exponential-moving-average","status":"publish","type":"post","link":"https:\/\/www.niftylivecharts.com\/blog\/which-is-better-simple-moving-average-or-exponential-moving-average\/","title":{"rendered":"Simple Moving Average  v\/s  Exponential Moving Average ?"},"content":{"rendered":"<h2><span style=\"text-decoration: underline;\"><strong>SMA vs. EMA<\/strong><\/span><\/h2>\n<p>First, let\u2019s start with an exponential moving average. When you want a moving average that will respond to the price action rather quickly, then a short period EMA is the best way to go.\u00a0 These can help you catch trends very early, which will result in higher profit. In fact, the earlier you catch a trend, the longer you can ride it and rake in those profits!<\/p>\n<p>The disadvantage\u00a0 to the choppy moving average is that you might get faked out.\u00a0 Because the moving average responds so quickly to the price, you might think a trend is forming when in actuality; it could just be a price spike.<\/p>\n<p>With a simple moving average, the opposite is true. When you want a moving average that is smoother and slower to respond to price action, then a longer period SMA is the best way to go.<\/p>\n<p>Although it is slow to respond to the price action, it will save you from many fake outs.\u00a0 The downside is that it might delay you too long, and you might miss out on a good trade.<\/p>\n<p><strong><span style=\"text-decoration: underline;\"><br \/>\nSimple Moving Average<\/span><\/strong><br \/>\n<strong>Pros:<\/strong><br \/>\nDisplays a smooth chart, which eliminates most fakeouts.<br \/>\n<strong>Cons:<\/strong><br \/>\nSlow moving, which may cause a lag in buying and selling signals. \u00a0\u00a0 \u00a0More prone to cause fakeouts and give errant signals.<\/p>\n<p><span style=\"text-decoration: underline;\"><strong><br \/>\nExponential Moving Average<\/strong><\/span><\/p>\n<p><strong>PROS<\/strong><br \/>\nQuick moving, and is good at showing recent price swings.<strong><br \/>\nCons<\/strong><br \/>\nMore prone to cause fakeouts and give errant signals.<\/p>\n<p>So which one is better? It\u2019s really up to you to decide.\u00a0 Many traders plot several different moving averages to give them both sides of the story. They might use a longer period simple moving average to find out what the overall trend is, and then use a shorter period exponential moving average to find a good time to enter a trade.<\/p>\n<p>In fact, many trading systems are built around what is called \u201cMoving Average Crossovers\u201d.\u00a0 Later in this course, we will give you an example of how you can use moving averages as part of your trading system.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>SMA vs. EMA First, let\u2019s start with an exponential moving average. When you want a moving average that will respond to the price action rather quickly, then a short period EMA is the best way to go.\u00a0 These can help you catch trends very early, which will result in higher profit. In fact, the earlier [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_genesis_hide_title":false,"_genesis_hide_breadcrumbs":false,"_genesis_hide_singular_image":false,"_genesis_hide_footer_widgets":false,"_genesis_custom_body_class":"","_genesis_custom_post_class":"","_genesis_layout":"","footnotes":""},"categories":[1],"tags":[2913,2911,2914,2910,2912],"class_list":["post-898","post","type-post","status-publish","format-standard","category-general","tag-ema","tag-exponential-moving-average","tag-sam-vs-ema","tag-simple-moving-average","tag-sma","entry"],"_links":{"self":[{"href":"https:\/\/www.niftylivecharts.com\/blog\/wp-json\/wp\/v2\/posts\/898","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.niftylivecharts.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.niftylivecharts.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.niftylivecharts.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.niftylivecharts.com\/blog\/wp-json\/wp\/v2\/comments?post=898"}],"version-history":[{"count":0,"href":"https:\/\/www.niftylivecharts.com\/blog\/wp-json\/wp\/v2\/posts\/898\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.niftylivecharts.com\/blog\/wp-json\/wp\/v2\/media?parent=898"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.niftylivecharts.com\/blog\/wp-json\/wp\/v2\/categories?post=898"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.niftylivecharts.com\/blog\/wp-json\/wp\/v2\/tags?post=898"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}