![]() Since the EMA will move with price sooner than the SMA, it often gets whipsawed, making it less than ideal for triggering entries and exits on “slower” chart timeframes like daily (or longer). The same attributes that make the EMA more suited for short-term trading limit its effectiveness when it comes to longer-term trading. With moving averages in general, the longer the time period, the slower it is to react to price movement.īut with all else being equal, an EMA will track price more closely than an SMA.īecause of this, the exponential moving average is typically considered more appropriate for short-term trading. More prone to cause fakeouts and give errant signals. Slow-moving, which may cause a lag in buying and selling signals Quick Moving and is good at showing recent price swings. It helps you catch the beginning of the trend but you run the risk of getting sidetracked by fakeouts (or naps if you’re a sleepy trader).īelow is a table to help you remember the pros and cons of each.ĭisplays a smooth chart that eliminates most fakeouts. ![]() On the other hand, the hare is quick, like the EMA. However, it has a hard shell to protect itself, and similarly, using SMAs would help you avoid getting caught up in fakeouts. ![]() The tortoise is slow, like the SMA, so you might miss out on getting in on the trend early. The downside is that it might delay you too long, and you might miss out on a good entry price or the trade altogether.Īn easy analogy to remember the difference between the two is to think of a hare and a tortoise. Although it is slow to respond to the price action, it could possibly save you from many fake outs.
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