• Skip to main content
  • Skip to secondary menu
  • Skip to primary sidebar
  • Skip to footer

Toro Demo Trading

Platform How To

Never invest money that you can’t afford to lose.

RISK WARNING: 68% of retail investor accounts lose money when trading CFDs.

This website is created by fans of the eToro platform. Not by eToro itself.

  • Trading Basics
  • Platfrom Guides
  • Strategy
  • Trading Tools
    • Forex Market Hours
    • Trading checklist
    • Trading Balance Growth Calculator
    • Martingale Calculator + Strategy explained
    • Calculate your first Million
    • Gain-Loss Percentage Calculator
    • Forex Tools for trading
    • Economic Calendar
    • Technical summery Currency pairs Buy and Sell
    • Crypto Currencies top-10 Active Price Movement
  • Video tutorials
  • REGISTER / LOGIN

Guide to Effective Trading Using the EMA Indicator on Toro Demo

The use of indicators has improved trading performance exponentially. It allows a trader to see the unseen and enables more sound decisions when trading. Among the most commonly used indicators in trading is the EMA or Exponential Moving Average. In this post, we’ll provide you with everything you need to know about the EMA indicator and how to increase your potential profits using it.


(NOTE: Before we continue, we have to give a disclaimer that the trading products offered by the companies listed on this website carry a high level of risk and can result in the loss of all your funds. CFDs are complicated instruments that are never guaranteed to provide you supplemental earnings.  In fact, Around 68% of all retail investors experienced a loss while trading CFDs. Make sure to keep this in mind before attempting to use the eToro platform yourself. All the information found on this website is not official trading advice and all practices shown are referenced for the use of the Demo account only.)


 

Contents

  • 1 What is an EMA?
  • 2 EMA Computation
  • 3 What Does the EMA Tell You?
  • 4 How to Implement EMA Indicators on an Actual Trade
  • 5 Our Final Thoughts

What is an EMA?

EMA Indicator

The EMA or Exponential Moving Average is a trading indicator that makes use of recent data levels and points on a chart. It is the average price per specific period or range of time. In addition, the EMA is also termed as “Exponentially Weighted Moving Average” since it focuses mainly on the recent price levels on a chart.  EMA is not to be compared with SMA or “Simple Moving Average” since SMA focuses more on observations in a given period. The EMA is among the oldest yet most reliable indicators used by many traders and it is a great tool to identify entry and exit points.

EMA Computation

Computation of the EMA is done in three steps. The first step is to determine the SMA, followed by the weighting multiplier, and then the EMA through a given formula.

The SMA will be computed by simply finding the average price over a specified range. The specified range will be dependent on the traders’ preference. Say the trader wants to use a range of 20 days, the SMA will be computed by summing up all the closing prices from the last 20 days and divide it by 20.

As for the weighting multiplier, it is calculated using the equation, K=2/(n+1). Where “K” is the Weighting multiplier and “n” is the preferred time period. Say the preferred time period is 20, the equation for the weighting multiplier would be as follows: K=2/(20+1). Therefore, the weighting multiplier for a period of 20 days would be .095 or 9.5%.

Lastly, the EMA is calculated using the formula:

EMA= (Current Price x K) + [Previous EMA x (1-K)]

As an example, for a given period of 20 days and a current price of $3.5, the computation for the EMA would be:

EMA of day 19 = seeded price (current price)

K = .095 (from previous computation)

EMA of day 20   = (3.5 x .095) + [3.5 x (1-.095)

= .3325 + 3.1675

= 3.5

As another example, say we have the following given. 9 days with the current price of $5 and the previous EMA of 4.6.

K             =             2/(9+1)

=             0.2

EMA9    =             (5x.2) + [4.6 x (1-.2)]

=             1 + 3.68

=             4.68

The EMA computation can become a challenge to extract since it involves a few equations and accuracy is very important. Fortunately, broker platforms today are equipped with tools and settings where the EMA can be easily extracted and drawn in any chart.

To use the EMA indicator on the eToro platform, simply login to the eToro chart and click on the settings tab located on the upper right corner of the dashboard. Press the “Settings” tab and be directed to the set of tools available. Click the “Studies II” tab and click on the “Moving Average” tool.

Settings Tab

As soon as you click the “Moving Average” tool you’ll be directed to a form where you can fill out specific details for the Moving average. To choose the EMA indicator, choose “Exponential” from the “Type” dropdown menu. Specify any desired period on the “Period” form and hit “Create” to show the indicator on the chart.

EMA Settings

The EMA on eToro can be generated multiple times and can have different colors for easy reading.

What Does the EMA Tell You?

The EMA when plotted actually shows the best exit and entry points on a chart. The line that connects the EMA points serves as a bounding line or a fence that separates buying and selling areas on a chart. In addition, the EMA indicator can also be used subjectively to identify stop loss points and optimum target prices in a chart on any range. While the use of a single EMA indicator on a chart can already make trading more efficient, combining multiple EMA indicators with a different range would further improve trading accuracy. Furthermore, crossing EMAs are often considered as a reliable exit or entry point by most traders.

Whenever the price is above the EMA line, it is usually interpreted as a good sign since the trend is expected to move upwards. Whereas, if the price is located below the EMA line, the trend is moving downward.

Among the most quoted or used EMA’s on trading is the EMA 12 and EMA 26 is usually paired with other indicators such as MACD, RSI, and even PPO (Percentage Price Oscillator) to further improve accuracy in estimating entry and exit points.

How to Implement EMA Indicators on an Actual Trade

Implementing EMA indicators on a chart is very much straightforward. Simply activate the EMA indicators through the steps mentioned above and choose your preferred EMA range. For the following examples, we’ll be using EMA12 and EMA26. The EMA12 will be represented by the red line, while the EMA26 will be represented by the blue line on the chart. The ellipses display the possible buy points or sell points where both the indicators cross or intersect.

On this first example with the asset – Apple, the EMA12 and EMA 26 indicators provide a visible view of the best entry and exit points on the chart. Whenever the EMA12 indicator crosses the EMA26 indicator, either a buying or selling signal is confirmed.

EMA Indicators on Apple

For buy-signals on this chart, the EMA12 indicator is always above the EMA26 indicator. On the other hand, the best sell-signals would be when the EMA26 indicator is above the EMA12 indicator.

Here’s another example for implementing the EMA indicator on a chart using two EMA range.

EMA Indicators on Amazon

On this second example from the asset – Amazon, also makes use of the EMA12 indicator and the EMA26 indicators. On here, the ideal buy and sell points are also enclosed with ellipses and arrows.

Our Final Thoughts

The EMA indicator is an excellent tool to use for trending markets. It allows a trader to identify safe and low-risk entry and exit points on a chart. The best thing about EMA indicators is that it is easy to use, modify, interpret, and can be used on any range – whether on a minute chart, hourly, daily, weekly, and others.

Depending on how the EMA indicator is used, it can match any trading strategies such as trend-following, position trading, swing trading, and others. For a trader who relies on technical analysis and historical data, the EMA is an essential indicator to every chart.

Making use of the EMA indicator to increase potential profits is certainly achievable provided there is a good understanding of the right range and settings for the indicator. To further improve assumptions and estimates regarding the ideal entry and exit points on a chart using the EMA indicator, it is best to use it with other indicators as confirmation. Other indicators to use with the EMA include RSI, MACD, Volume, and retracement indicators. These additional indicators would reinforce decisions when trading and would provide more accurate points on a chart.

To master the EMA indicator, simply create a virtual account on eToro and trade on a real-time market with real stocks. By practicing the use of EMA indicators on a real-time market, not only will you be able to gain experience and proficiency in using the indicator but you can also get yourself familiar with how your specific stocks or assets move in the market.

Good luck and enjoy!


Support us by using the eToro sign-up form down below.⬇️

Plus you will get a Free demo account! Thank you!??etoro sign-up form

 

 

 

 

 

 

 

 

 

 

 

 

 

 

eToro is a multi-asset platform that offers both investing in stocks and crypto assets, as well as trading CFDs.

Please note that CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 68% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money.

Past performance is not an indication of future results. Trading history presented is less than 5 complete years and may not suffice as basis for investment decision.

Copy trading is a portfolio management service, provided by eToro (Europe) Ltd., which is authorized and regulated by the Cyprus Securities and Exchange Commission.

Cryptoasset investing is unregulated in some EU countries and the UK. No consumer protection. Your capital is at risk.

eToro USA LLC does not offer CFDs and makes no representation and assumes no liability as to the accuracy or completeness of the content of this publication, which has been prepared by our partner utilizing publicly available non-entity-specific information about eToro.

How useful was this post?

Click on a star to rate it!

Average rating 4.5 / 5. Vote count: 76

No votes so far! Be the first to rate this post.

As you found this post useful...

Follow us on social media!

We are sorry that this post was not useful for you!

Let us improve this post!

Tell us how we can improve this post?

You might also want to read

Oscillators eToro

Oscillator Indicators on eToro

What is an Oscillator Indicator? Oscillator indicators are tools of technical analysis that plot … [Read More...] about Oscillator Indicators on eToro

invest in copy trader etoro

How much to invest into eToro CopyTrader?

eToro CopyTrader investment amount Deciding on who to copy is a tricky process, but when you do … [Read More...] about How much to invest into eToro CopyTrader?

Long Term Chart Patterns

Top 5 Candlestick Patterns for Long-Term Trades on eToro

In the forex and stock market industry, prices will always fluctuate in a consolidation or … [Read More...] about Top 5 Candlestick Patterns for Long-Term Trades on eToro

Slippage and spreads eToro

Spreads and slippage on eToro

eToro makes the process of trading and investing as easy and transparent as possible, providing full … [Read More...] about Spreads and slippage on eToro

Open eToro account

How to Open an Account on eToro

One of the reasons eToro became so popular is its user-friendliness. The UX design of the eToro … [Read More...] about How to Open an Account on eToro

Reader Interactions

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

six − 4 =

Primary Sidebar

Open Free eToro Demo acount Now!

etoro sign-up form

RISK WARNING

68% of retail investor accounts lose money when trading CFDs. 

eToro is a multi-asset platform which offers both investing in stocks and cryptoassets, as well as trading CFDs.

Please note that CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 68% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money.

Past performance is not an indication of future results.

eToro USA LLC does not offer CFDs and makes no representation and assumes no liability as to the accuracy or completeness of the content of this publication, which has been prepared by our partner utilizing publicly available non-entity specific information about eToro.

Trending Posts Now

  • eToro trading
    eToro Club Tiers – Why and what to know about them
    October 25, 2020
    By Bart Bregman | 0 Comments
  • Etoro Review
    eToro Review 2020 – The Lazy Traders’ Guide to Know Everything
    October 26, 2020
    By Bart Bregman | 0 Comments
  • Fees and commissions
    eToro Fees and Commissions
    October 26, 2020
    By Bart Bregman | 0 Comments
  • Trading Balance Growth Calculator
    Trading Balance Growth Calculator
    December 7, 2020
    By Bart Bregman | 0 Comments
  • Leveraged trading
    Trading using Leverage on eToro
    November 1, 2020
    By Bart Bregman | 0 Comments
  • EMA Indicator
    Guide to Effective Trading Using the EMA Indicator on Toro Demo
    February 23, 2021
    By Bart Bregman | 0 Comments
  • Shorting, Selling and Closing
    Short selling and closing on eToro – What’s the difference?
    November 20, 2020
    By Bart Bregman | 0 Comments
  • cfd profit etoro
    Calculate Your Profit – CFD Trading On eToro
    December 4, 2020
    By Bart Bregman | 0 Comments
  • Candle Patterns
    Most Traded Candlestick Patterns on eToro
    April 4, 2021
    By Bart Bregman | 0 Comments
  • etoro chart tool
    Chart Your Course To Success On eToro
    November 30, 2020
    By Bart Bregman | 0 Comments

Footer

  • About Us
  • Contact us
  • Sitemap
  • Earnings Disclaimer
  • Privacy Policy
  • Privacy Policy – Toro Demo Trading app
Bear Markets eToro

Despite bear markets being a natural period of a market cycle, it may be hard to anticipate such … [Read More...] about Trading in a Bear Market on eToro

Long Term Chart Patterns

In the forex and stock market industry, prices will always fluctuate in a consolidation or … [Read More...] about Top 5 Candlestick Patterns for Long-Term Trades on eToro

eToro portoflio planning

Many investors are looking for a long-term investment opportunities that would be optimal to their … [Read More...] about A Step-by-step approach to eToro portfolio planning

eToro portfolio balance

It may be easy to think that a long-term investment into a portfolio of assets is a one time 'do and … [Read More...] about How to re-balance your eToro portfolio?

Flag Pattern

If you’ve ventured into trading, you’ve likely encountered candlestick patterns. Candlestick … [Read More...] about Understanding Flag Patterns and How to Use Them On eToro Trades

Grow etoro portfolio

Some investors are able to generate returns on their investments without their portfolios growing … [Read More...] about 7 strategies to Grow your portfolio

GENERAL RISK WARNING
The trading products offered by the companies listed on this website carry a high level of risk and can result in the loss of all your funds.
You should never trade money that you cannot afford to lose.
Please Be aware that CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage.
68% of retail investor accounts lose money when trading CFDs.
Copyright © 2023 Torodemotrading.com

This website uses cookies to improve your experience. We'll assume you're ok with this, but you can opt-out if you wish.Accept Read More
Privacy & Cookies Policy

Privacy Overview

This website uses cookies to improve your experience while you navigate through the website. Out of these cookies, the cookies that are categorized as necessary are stored on your browser as they are as essential for the working of basic functionalities of the website. We also use third-party cookies that help us analyze and understand how you use this website. These cookies will be stored in your browser only with your consent. You also have the option to opt-out of these cookies. But opting out of some of these cookies may have an effect on your browsing experience.
Necessary
Always Enabled

Necessary cookies are absolutely essential for the website to function properly. This category only includes cookies that ensures basic functionalities and security features of the website. These cookies do not store any personal information.

en English
af Afrikaansar Arabicbn Bengalibg Bulgarianzh-CN Chinese (Simplified)zh-TW Chinese (Traditional)cs Czechda Danishnl Dutchen Englishet Estoniantl Filipinofi Finnishfr Frenchka Georgiande Germanel Greekhi Hindihu Hungarianid Indonesianit Italianko Koreanms Malayno Norwegianpl Polishpt Portuguesero Romanianru Russianes Spanishsv Swedishth Thaiuk Ukrainianur Urduvi Vietnamese