EMA (Exponential Moving Average) Strategy

Overview

Similar to SMA but gives more weight to recent prices, making it more responsive to price changes.

How It Works

Uses EMA crossovers for signals: - Short EMA: 12 or 20-period - Long EMA: 26 or 50-period

Trading Signals

Buy Signal

Short EMA crosses above long EMA.

Sell Signal

Short EMA crosses below long EMA.

Usage Example

prices = stock.df["adj_close_price"].to_a

ema_short = SQAI.ema(prices, period: 12)
ema_long = SQAI.ema(prices, period: 26)

vector = OpenStruct.new(
  ema_short: ema_short,
  ema_long: ema_long
)

signal = SQA::Strategy::EMA.trade(vector)

Characteristics

• Complexity: Low
• Best Market: Trending
• Win Rate: 45-55%

Strengths

✅ Faster than SMA
✅ Better for short-term trading
✅ Reduces lag

Weaknesses

❌ More false signals
❌ Still lags in fast markets