# Simple vs Exponential Moving Average | Cameron May 9-16-19 | Getting Started with Technical Analysis Show Video

Copy. That and, paste. It down, here so. We, do take the closing price of day one but. We multiply, that by, a. Factor of one and, then. We take the closing price of day two and, we multiply that by two, and, so, on so, we take day three. And. We multiply that by three. And. So. What's the net effect well by the time you get to today. This. Being a 20, day moving average, we, would take today's value, and right, at this moment the value is 230. \$1.48. Multiply. That by 20. And, then. Add that into the equation so. What's happening today for, a 20 period, average is 20. Times more. Important, to the construction of the indicator as what, happened on day one so. Yeah we're waiting what's, happening right now much, more heavily so, what impact does, that have now whether you follow the math or not and we could work this out if you want to you could just just. Go, to the archive and run. Through how this would work okay so day one we take the closing value multiply that by one and then we add that today to accept. We multiply that day to value, by two and, so on and then, divide it all up it's actually not oh let me finish this. It's, not the number of days here. This. Would actually be the number of days. Times. All, of these closing, values. So. In. This case it would be. Divided. By. The. Numbers and how am I going to express that that, just occurred to me. In. Any way how. Do we want to phrase that what's the denominator. Gonna, be here, it's. The number of. Waited. Days. So. We have one here and two there and three there and so on we add those all up okay. All. Right but if you want to run through that calculation on, your own after the fact you can do that I don't want to spend too much time on the calculation, but I want to explore, the. The. Potential pros and cons, so. If, you can envision before, we even put on this exponential, moving average. What. Is it going to look like compared. To the original. Well. If one, day is weighted, above, the others even to some extent it's not weighted very much over yesterday. But it's weighted very, much more heavily than day one it. Creates, a greater, sensitivity, to, current, day movements. So. If we get a big move down today the, exponential. Moving average will reflect that a little bit more dramatically, than the simple, moving average so, what we wind up with is a line that's more jagged, in its presentation, it's, a little bit more. It's. Just more volatile, so. Let's add that to the chart let's pop up here to our little beaker icon and. I'm, gonna type in though I'm gonna start typing in the word exponential. I don't have to type the whole thing in it'll quickly find it there's, our moving. Average exponential, I'm, going to add that and make, sure that the timeframe, is the same for comparison, purposes, let's, keep the simple and the exponential, the same so, I'm going to come over here to our gear icon. And. I'm gonna change our timeframe to a 20, the default on mine happens to be 26, that's okay we're gonna change it to 20 let's. Make the width this same, but. I'm going to keep the color different, so that we can distinguish, between the two the simple moving averages of the green the, exponential, moving average, is the red click, OK click apply. And, then. Click OK again and we'll see now we, have what, appears to be quite, a similar. Line. But. By. Degree, there is some, difference, it's, still a trend line it. Still can conceptually, be used for a trend identification, but also potentially, for entry signals so, what an tree and exit signals let's. Talk about that for just a moment and this is where. It's. The. Real conceptual, difference between the two starts to become more obvious, let's. Suppose that a trader has a very simple, approach. They, get in when, price rises, above their moving average and they get out well, how, about rises, above and closes above and.