Exponential Moving Average: How to Use EMA to Trade Volatile Crypto

The cryptocurrency market is highly speculative in nature, which usually leads to exaggerated levels of volatility. To compensate, investors need to use technical indicators that adapt to the volatility of cryptocurrencies. One such indicator is the exponential moving average (EMA), which is designed to smooth out the effects of price volatility.

Among technical indicators, the moving average (MA) is one of the most commonly used tools to indicate overall trend direction. The exponential moving average focuses on the most recent price data, which is important when trading in the volatile crypto environment. In this article, we’ll discuss how the EMA is used in crypto trading, and we’ll outline different ways to use the EMA, along with practical trading examples.

What Is an Exponential Moving Average? 

An exponential moving average is a technical indicator that gives greater weighting to recent prices in its calculation. As a result, EMA responds more quickly to the latest price changes, as compared to a simple moving average (SMA), which has a bigger lag.