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My previous post:
> Here's what I've always assumed it is, and how I've always used it:
> >
> > SC = Smoothing Constant
> >
> > Today's EMA= ((Today's price) * SC) + ((Yesterday's EMA) * (1 - SC))
Your reply:
>SC = 2 / (N+1) where N = number of days in EMA
At first glance, though, this looks very misleading. It gives the user the
false sense that N in any _meaningful_ way effects the lookback
period. Yes, it obviously effects it, but not in a way that has much to do
with the # of days lookback desired.
Also, what's the deal with the "+1"? Since the EMA is such a wild
approximation of the desired lookback period (the EMA really looks back
forever, but with distant past data being under-weighted into oblivion),
what difference does it make whether we add (or subtract) a "1" to the
denominator? Is this somehow more elegant? I don't see it.
Thanks.
Paul
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