Exponential Moving Average
From Yahoo! Finance :
"An exponential moving average differs slightly from a simple moving average in that it gives extra weight to more recent price data. This allows investors to track and respond much more quickly to recent price trends that takes more time to appear on an SMA. The formula for an EMA is: EMA = price today * K + EMA yest * (1-K) where K = 2 / (N+1)."
As everyone seems to be using EMA's, could someone please explain why, for example, a 10% EMA is associated with 19 days? I am wondering where the familiar formula, Percentage = 2/(N + 1), comes from.
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