Definition
Because it reacts faster to new prices than a simple moving average, an EMA turns sooner and follows price more closely. Short-term traders often use EMAs such as the 9 or 21; many use the simple average for longer spans like 200 days.
Formula
EMA = price x k + previous EMA x (1 - k), where k = 2 / (period + 1)
Watch out for
Faster also means more false signals in choppy markets.