What is an EMA versus an SMA?

You may see multiple moving averages added to a chart, including EMAs and SMAs.  What's the difference betweem them?

An SMA is a Simple Moving Average.  It plots the average of the last n bars.  So if the Length of the SMA is 50, and it's set to use the close of each bar, it adds up the last 50 closing values and divides by 50 to get the current SMA(50).  It can then be plotted as a continuous line across your charts.

An EMA is an Exponential Moving Average.  It's similar to an SMA, but the formula is weighted, where it puts more emphasis on recent bars rather than giving equal weight to all bars.  This way, an EMA can be more responsive and reactive to recently changed bars.  You'll often see the EMA responding sooner to a rise in price, for example, than an SMA.

Many traders use several EMAs and SMAs.  Which ones are used can depend on the timeframe, chart type, etc.  We often use the 8 EMA, 50 EMA and 200 SMA.  Sometimes we may use a 20 EMA, or a 100 EMA, or others.  If you're wondering which EMAs have been added to a chart in the live trading room, just ask the room host during a quiet point in the session.