What Is an Exponential Moving Average

An average that leans toward today

An exponential moving average is a moving average that counts today's close most and every older day a little less. Like any moving average it is worked out again after every close and follows the price smoothly; the blue line over gold's candles from February to April 2025 is its ten-day version. The difference is in how the days are counted. A simple average counts ten days equally and forgets the eleventh. This one fades instead: today strongly, yesterday less, and so on back, never quite to nothing.

A stone in a pond

The picture is a stone dropped in a pond. The stone is today's close, and the ring it makes is sharp. Yesterday's ring has spread and faded a little, the one before it more, and the rings from ten days ago are faint but still there. An exponential average counts the days the way the pond shows them: the newest strongly, the older ones less and less. A simple average would cut the rings off at ten and count the ten inside it all the same.

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