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1. 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.

Be healthy & wealthy
News Desk  Reply With Quote

2. 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  Reply With Quote

3. Originally Posted by PCMNewsdesk 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?  Reply With Quote

4. Indicators. Indicators are composed of multiple data elements, and typically consist of a numerator and denominator. Calculated totals do not have a denominator. Indicators are used to calculate coverage rates, incidence and other values are a result of data element values that have been entered into the system.  Reply With Quote

5. Hi,
First of all thanks for sharing this valuable knowledge.
I am new on forex trading. I want to know more about forex.

""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""

Actually i understand step 1. But in step two you said devided them by 22, this term i don't understand. And what is the full definition of (k).

Thank you..  Reply With Quote  Reply With Quote

7. How i calculate my profit perfectly. Does any body know?  Reply With Quote

8. Originally Posted by Quiinhome How i calculate my profit perfectly. Does any body know?
You will need to make use of the PIPs Calculator  Reply With Quote

9. Thanks for sharing however it would be nice to add some more indicators as there are several others such as tick volume, Volume-Weighted Average Price, On-Balance-Volume, and Money Flow Index, Moving Averages, EMA, RSI.  Reply With Quote

10. Yes, I was also looking for some good and reliable indicators, let's hope we get siome knowledge regarding the same.  Reply With Quote

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