Exponential Moving Average (EMA)

A type of moving average that places greater weight on the most recent price data, making it more responsive to new information than a simple moving average. The 12-day and 26-day EMAs are the foundation of the MACD indicator, and the 9-day EMA is a popular short-term trend filter. Day traders and swing traders often prefer EMAs because they react faster to price changes and reduce the lag inherent in simple averages.