Types of Moving Average
There are various types of Moving Averages depending on how they are calculated. For example, some Moving Average lines weigh the latest price action heavier than the previous price action, others treat all the same price action for the entire period. Come now on some of the most popular types of Moving Averages:
Simple Moving Average (SMA)
Above you see the most common Moving Average structure - Simple Moving Average. It only gives the arithmetic mean of the period on the graph.
Exponential Moving Average (EMA)
The Exponential Moving Average (EMA) is another Moving Average, which Forex traders often use. That looks the same as the Simple Moving Average on the graph. However, the EMA calculation is different from the calculation of SMA. The reason for this is that EMA emphasizes more recent periods. This is the Exponential Moving Average formula, which is used to calculate EMA.