May 19, 2022

Trading Cryptocurrency – Difference Between Moving Averages (MA vs EMA)



In this cryptocurrency trading tutorial (technical analysis) I go over the difference between moving averages MA and Exponential Moving Average EMA – this can help you increase profits trading altcoins because using the proper moving average at the right time is very important. This is meant to be a beginner and noob friendly trading tutorial but it can help any day trader or swing trader in the crypto markets or any market, for that matter.

Trading Cryptocurrency – Difference Between Moving Averages (MA vs EMA)

Easiest ways to trade altcoins or bitcoins :


In this example, I used the bitcoin/usd pairing.

SOURCE: my own experience and https://www.investopedia.com/articles/trading/10/simple-exponential-moving-averages-compare.asp

FROM THE ARTICLE: the exponential moving average (EMA) gives a higher weighting to recent prices than the simple moving average (SMA) does, while the SMA assigns equal weighting to all values.

Moving averages are more than the study of a sequence of numbers in successive order. Early practitioners of time series analysis were actually more concerned with individual time series numbers than they were with the interpolation of that data. Interpolation, in the form of probability theories and analysis, came much later, as patterns were developed and correlations discovered.

Once understood, various shaped curves and lines were drawn along the time series in an attempt to predict where the data points might go. These are now considered basic methods currently used by technical analysis traders. Charting analysis can be traced back to 18th Century Japan, yet how and when moving averages were first applied to market prices remains a mystery. It is generally understood that simple moving averages (SMA) were used long before exponential moving averages (EMA), because EMAs are built on SMA framework and the SMA continuum was more easily understood for plotting and tracking purposes. (Would you like a little background reading? Check out Moving Averages: What Are They?)

Simple Moving Average (SMA)
Simple moving averages became the preferred method for tracking market prices because they are quick to calculate and easy to understand. Early market practitioners operated without the use of the sophisticated chart metrics in use today, so they relied primarily on market prices as their sole guides. They calculated market prices by hand, and graphed those prices to denote trends and market direction. This process was quite tedious, but proved quite profitable with confirmation of further studies.

To calculate a 10-day simple moving average, simply add the closing prices of the last 10 days and divide by 10. The 20-day moving average is calculated by adding the closing prices over a 20-day period and divide by 20, and so on.

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