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  1. #1
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    How Indicators are calculated?

    Dear members
    Hi,

    Here we are going to introduce and talk about how some the most useful indicators are calculated and may be discuss about how they are being used in trading.
    Please be with us

    Be healthy & wealthy
    News Desk

  2. #2
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    EMA - Exponential Moving Average

    EMA - Exponential Moving Average

    Exponetial Moving Average (EMA for short) is one of the most used indicators in technical analysis today. But how do you calculate it for yourself, using a paper and a pen or – preferred – a spreadsheet program of your choice. Let’s find out in this explanation of EMA calculation.



    Calculating Exponential Moving Average (EMA) is of course done automatically by most trading and technical analysis software out there today.

    Here is how to calculate it manually which also adds to the understanding on how it works.


    In this example we shall calculate EMA for a the price of a stock. We want a 22 day EMA which is a common enough time frame for a long EMA.

    The formula for calculating EMA is as follows:

    EMA = Price(t) * k + EMA(y) * (1 – k)
    t = today, y = yesterday, N = number of days in EMA, k = 2/(N+1)

    Use the following steps to calculate a 22 day EMA:


    1) Start by calculating k for the given time frame. 2 / (22 + 1) = 0,0869

    2) Add the closing prices for the first 22 days together and divide them by 22.

    3) You’re now ready to start getting the first EMA day by taking the following day’s (day 23) closing price multiplied by k, then multiply the previous day’s moving average by (1-k) and add the two.

    4) Do step 3 over and over for each day that follows to get the full range of EMA.


    This can of course be put into Excel or some other spreadsheet software to make the process of calculating EMA semi-automatic.

    Goodluck

  3. #3
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    Quote Originally Posted by PCMNewsdesk View Post
    EMA - Exponential Moving Average

    Exponetial Moving Average (EMA for short) is one of the most used indicators in technical analysis today. But how do you calculate it for yourself, using a paper and a pen or – preferred – a spreadsheet program of your choice. Let’s find out in this explanation of EMA calculation.



    Calculating Exponential Moving Average (EMA) is of course done automatically by most trading and technical analysis software out there today.

    Here is how to calculate it manually which also adds to the understanding on how it works.


    In this example we shall calculate EMA for a the price of a stock. We want a 22 day EMA which is a common enough time frame for a long EMA.

    The formula for calculating EMA is as follows:




    Use the following steps to calculate a 22 day EMA:


    1) Start by calculating k for the given time frame. 2 / (22 + 1) = 0,0869

    2) Add the closing prices for the first 22 days together and divide them by 22.

    3) You’re now ready to start getting the first EMA day by taking the following day’s (day 23) closing price multiplied by k, then multiply the previous day’s moving average by (1-k) and add the two.

    4) Do step 3 over and over for each day that follows to get the full range of EMA.


    This can of course be put into Excel or some other spreadsheet software to make the process of calculating EMA semi-automatic.

    Goodluck

    What about other indicators. Though everything can be found in the wikipedia I would like to get easier and clearer explanation here. Now I trade with MACD and bollinger bands with my broker. Can you explain their origination and ground principles they work on?
    Last edited by Moderator; 10-07-2014 at 04:29 AM.

  4. ARIONFORXtarder
 

 

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