Exponential moving average and how to calculate EMA

Exponential Moving Average (EMA)
 Exponential moving average or EMA is also known as exponentially weighted moving average (EWMA). It gives more weight to recent prices in other words the weight of old prices decreases exponentially.
 A seven day EMA applies 25 per cent weighting Calculation of EMA is a complicated one. Stock market traders can get EMA from almost all technical charts.
In order to calculate EMA, first calculate SMA.
SMA = Mean or average of previous n days= Sum of n days / n
For eg, 7 SMA= Sum of Seven days closing price / 7
Then you have to find smoothing factor.
Smoothing factor = (2 / (Time periods + 1) ) = (2 / (7 + 1) ) = 0.25 (25 per cent weighting; ie 0.25*100)
Then calculate EMA by applying the following formula.

EMA= [Close - EMA(Yesterday)] x Smoothing Factor + EMA(Yesterday).

Note that Some people use current price instead of close.

If you know the per cent and want to get time period you can use the following formula.

Time period= (2/Smoothing Factor)-1
Here smoothing factor is per cent divided by 100.
For eg;- If the per cent is 25, smoothing factor is 25/100= 0.25
Then time period= (2/0.25)-1= 7; so seven is the time period.

An example of EMA calculation on a sheet is given below

Day	Close	7 SMA	Smoothing Factor	EMA 7
1	87.50
2	86.00
3	85.00
4	86.20
5	87.00
6	85.00
7	85.70	86.06		86.06
8	86.70	85.94	0.2500	86.22
9	87.20	86.11	0.2500	86.47
10	87.50	86.47	0.2500	86.72
11	87.70	86.69	0.2500	86.97
12	88.00	86.83	0.2500	87.23
13	88.80	87.37	0.2500	87.62
14	89.20	87.87	0.2500	88.01
15	90.20	88.37	0.2500	88.56
16	91.20	88.94	0.2500	89.22
17	91.70	89.54	0.2500	89.84
18	91.90	90.14	0.2500	90.36
19	92.50	90.79	0.2500	90.89
20	93.00	91.39	0.2500	91.42
21	93.50	92.00	0.2500	91.94
22	93.20	92.43	0.2500	92.25
23	92.70	92.64	0.2500	92.37
24	90.50	92.47	0.2500	91.90
25	91.70	92.44	0.2500	91.85
26	92.30	92.41	0.2500	91.96
27	93.80	92.53	0.2500	92.42
28	94.50	92.67	0.2500	92.94
29	94.80	92.90	0.2500	93.41
30	95.50	93.30	0.2500	93.93

EMA 5, 10, 20, 50, 100, and 200 are very common in stock market trading