> ## Documentation Index
> Fetch the complete documentation index at: https://learn.algopilot.com/llms.txt
> Use this file to discover all available pages before exploring further.

# Exponential Moving Average (EMA)

**What is it?**\
The Exponential Moving Average (EMA) is a trend-following indicator that gives more weight to recent prices, making it quicker to react to price changes than a simple moving average.

**How is it used?**

* **Trend direction**: If the EMA slopes up, it’s a bullish trend; if down, bearish.
* **Crossovers**: A shorter EMA (e.g., 12) crossing above a longer EMA (e.g., 26) signals a buy; crossing below signals a sell.
* **Support/resistance**: Prices often bounce off EMAs in strong trends.

**How is it calculated?**\
The EMA formula is:

EMA = (Current Price × Smoothing Factor) + (Previous EMA × (1 - Smoothing Factor))  

Smoothing Factor = 2 / (n + 1)  

Where n is the period (e.g., 12 or 26). The first EMA is often seeded with an SMA.

<sub>The above content is designed for informational purposes only, and is explicitly not investment advice. Algo Pilot is a US based technology company and not a bank, broker-dealer, or RIA. As such, Algo Pilot LLC does not provide investment advice and is not a member, SIPC. Brokerage services offered by 3rd parties are not directly affiliated with Algo Pilot LLC, and Algo Pilot users may choose the broker relationship that they desire.</sub>