Exponential Moving Average - Manual Calculation Guide

The formula for calculating Exponential Moving Average (EMA) is as follows –

EMA  =  [today’s price * K] + [EMA(of yesterday) *  (1-K)

where, 

          K = 2 /(N+1)

          N = number of days in the EMA (EMA length chosen by the trader)


1.  Choose the EMA length (N) .. let’s say for example we want a  10 day EMA.

2.  Calculate (K) for the length of the EMA (N) … [K= 2/(N+1)]

3.  On the first day of our calculation we won’t be having the value of previous days EMA. So only for the first day we use the value of a Simple Moving Average(SMA) for our chosen EMA length (10 days in this case) - (by adding closing prices for previous 10 days and dividing the sum by 10).

4.  On the 11^th day, multiply the days closing price by K … then …  multiply the previous day’s SMA(calculated in step 3.)  by (1-K), and add the two. The result is the 10 day EMA.

     5.  Keep repeating step 4 on each subsequent day to obtain the latest value for your 10 day EMA.

EMA IS CALCULATED AUTOMATICALLY THESE DAYS USING COMPUTERS.

Just in case, if you want to try calculating it manually!
Click to Calculate EMA Manually