The difference between an EMA and an SMA is how they weight prices: a simple moving average (SMA) gives every price in the period the same weight, while an exponential moving average (EMA) gives more weight to the most recent prices. The EMA therefore reacts faster to new moves but gives more false signals, and the SMA is smoother but slower. Neither is better in every case: swing traders often use EMAs to time entries and SMAs, especially the 200-day, to judge the bigger trend.
This guide explains how each average is calculated, how big the lag difference really is, how the 200 EMA and 200 SMA compare, which settings swing traders use in crypto, and how both power crossovers, Bollinger Bands and MACD.
Key Takeaways
- Same length, different weighting: a 20-period EMA puts about 9.5% of its weight on the latest close; a 20-period SMA puts exactly 5% on each of the last 20.
- Speed costs noise: the EMA turns earlier at tops and bottoms but whipsaws more in sideways markets.
- 200 SMA vs 200 EMA: the 200-day SMA is the classic long-term trend line; the 200 EMA hugs price more closely. Both are widely watched in crypto.
- Crypto days count differently: markets trade every day, so a 200-day average covers about 6.5 months, not the roughly 9.5 months it spans in stock markets.
- Use both: a common approach is EMAs for entries and exits and an SMA as the trend filter.
What Is a Simple Moving Average (SMA)?
An SMA adds up the closing prices of the last N periods and divides by N:
SMA = (P1 + P2 + … + PN) / N
For example, with five daily closes of 100, 102, 104, 103 and 106, the 5-day SMA is 515 / 5 = 103. Each new candle drops the oldest close and adds the newest, so the line moves along the chart. Because every price counts equally, a single sharp candle has limited effect, which makes the SMA smooth and slow.
What Is an Exponential Moving Average (EMA)?
An EMA starts from the previous EMA value and moves it a fixed fraction towards the latest close:
EMAtoday = Pricetoday × k + EMAyesterday × (1 − k), where k = 2 / (N + 1)
For a 9-period EMA, k = 2 / 10 = 0.2. If yesterday's EMA was 100 and today's close is 110, today's EMA is 110 × 0.2 + 100 × 0.8 = 102. For a 20-period EMA, k = 2 / 21 ≈ 0.095. The first EMA value is usually seeded with an SMA, and older prices never fully drop out: their weight just keeps shrinking.
Left: on the same simulated prices, the EMA 20 turns down a few candles before the SMA 20 after a top. Right: an SMA 10 weights each of the last 10 prices equally; an EMA 10 puts about a fifth of that weight on the latest price. Illustrative, not real market data.
EMA vs SMA: Key Differences
| SMA | EMA | |
|---|---|---|
| Weighting | Equal weight on every price in the period | More weight on recent prices, decreasing exponentially |
| Reaction speed | Slower; turns later after tops and bottoms | Faster; turns earlier |
| Noise | Smoother; fewer whipsaws in ranges | More whipsaws in sideways markets |
| Typical use | Long-term trend filter, widely watched levels (50 and 200-day) | Entry timing, dynamic support in trends, short-term momentum |
| Common settings | 50, 100, 200 | 9, 12, 20, 21, 26, 50, 200 |
| Built into | Bollinger Bands (20 SMA middle band) | MACD (12 and 26 EMA, 9 EMA signal line) |
200 EMA vs 200 SMA
The 200-period average is the most watched moving average of all, and traders argue about which version to use.
- 200 SMA: the traditional long-term trend line. Price above a rising 200-day SMA is widely read as a long-term uptrend, and the classic golden cross and death cross use the 50 and 200-day SMAs.
- 200 EMA: stays closer to price and turns sooner. Many crypto traders watch it on the daily and 4-hour charts as dynamic support or resistance.
Most of the time the two lines sit close together. They separate after sharp, sustained moves, when the 200 EMA catches up faster. Neither is "correct": a level matters partly because many traders watch it, so it helps to plot both and treat the zone between them as one area. In crypto, remember that 200 daily candles cover about 6.5 months, because the market trades every day, while 200 trading days in stock markets cover about 9.5 months.
EMA vs SMA for Swing Trading
Swing trades last days to weeks, so traders need averages that react quickly enough to catch the swing but are stable enough to define the trend. Common choices:
- 20 EMA: tracks the current swing; in strong trends, pullbacks often stall around it.
- 50 EMA or 50 SMA: the medium-term trend; a deeper pullback level.
- 200 SMA or 200 EMA: the long-term filter; many swing traders only take longs above it.
A practical combination is to use the 200-day SMA to decide the direction, then the 20 and 50 EMAs on the 4-hour or daily chart to time entries on pullbacks. Our EMA 20, 50 and 200 strategy guide covers that setup in detail, and our guide to swing trading timeframes helps you pick the chart.
Strategies That Use EMAs and SMAs
Trend direction and dynamic support
A rising average with price above it suggests an uptrend; a falling average with price below suggests a downtrend. In trends, price often pulls back to an average before continuing, so traders watch the 20 or 50 EMA as dynamic support or resistance.
Crossovers
A faster average crossing above a slower one, such as the 9 EMA over the 21 EMA or the 50 SMA over the 200 SMA, signals strengthening momentum; the reverse signals weakening. EMA crossovers come earlier and more often; SMA crossovers come later and less often. See moving average crossover strategies.
Envelopes and Bollinger Bands
Moving average envelopes plot lines a fixed percentage above and below an average to show stretched prices. Bollinger Bands do the same with standard deviations around a 20-period SMA, so the bands widen when volatility rises.
MACD
The MACD is built from EMAs: the difference between the 12 and 26-period EMAs, with a 9-period EMA of that difference as the signal line. Divergences between MACD and price are a common way to spot weakening trends.
Which Should You Use?
| If your priority is… | Lean towards | The trade-off |
|---|---|---|
| Catching swings early | EMA (9, 20, 21) | More false signals in ranges |
| A stable long-term trend filter | SMA (50, 200) | Turns late after major tops and bottoms |
| Levels other traders watch | Both 200s; 50 and 200 SMA for crosses | Levels are zones, not exact prices |
| Fewer, slower crossover signals | SMA crossovers | Later entries and exits |
| Building on other indicators | EMA for MACD, SMA for Bollinger Bands | Use the standard settings unless you have tested others |
Common Mistakes
- Using moving averages in a range: both lines flatten and price crosses them constantly; that is where most crossover losses come from.
- Optimising periods on past data: a setting that fit last year's chart rarely fits the next one. Stick with widely used settings or test changes properly.
- Treating a line as an exact level: price often overshoots an average before reacting.
- Mixing timeframes: a 200 EMA on the 15-minute chart is a very different line from the 200-day SMA.
- Ignoring the cost of fast signals: more EMA crossovers mean more trades and more fees.
Using EMAs and SMAs in Altrady
- Technical analysis screener: scan markets with conditions such as EMA crossovers and combine them with RSI, MACD or Bollinger Bands using AND/OR logic.
- Alerts when price reaches a level you have marked, such as the zone between the 200 EMA and 200 SMA.
- TradingView Bot: automate a moving average crossover strategy from your TradingView alerts.
- Chart replay and paper trading to test an EMA or SMA setup before going live.
For the definitions in a shorter reference format, see the Crypto Library chapter on simple and exponential moving averages.
Frequently Asked Questions
Is EMA or SMA better?
Neither is better in every situation. The EMA reacts faster and suits timing entries and short swings; the SMA is smoother and suits long-term trend filters. Many traders use both.
What is the difference between the 200 EMA and the 200 SMA?
The 200 SMA weights the last 200 closes equally and turns slowly; the 200 EMA weights recent closes more and stays closer to price. They usually sit close together and separate after sharp, sustained moves.
Why does the EMA react faster than the SMA?
Because it gives the latest price the largest weight, 2 / (N + 1) of the total, while the SMA gives every price in the period the same 1 / N weight. A new move therefore shifts the EMA more.
What is the best moving average for swing trading crypto?
Common choices are the 20 and 50 EMA for timing pullbacks and the 200-day SMA or EMA as a trend filter, on the 4-hour or daily chart. The best setting is the one you have tested on the markets and timeframe you trade.
How do you calculate an EMA?
Multiply today's close by k = 2 / (N + 1), multiply yesterday's EMA by (1 − k), and add the two. The first value is usually seeded with an SMA of the first N closes.
Can I use EMA and SMA together?
Yes. A common setup uses the 200-day SMA to decide direction and faster EMAs, such as the 20 and 50, to time entries in that direction.
Is a 200-day moving average the same in crypto and stocks?
Not in calendar time. Crypto trades every day, so 200 daily candles cover about 6.5 months; stock markets trade about 252 days a year, so 200 days covers about 9.5 months.
Moving averages describe past prices and lag by design. Trading involves risk, including the loss of your capital. This article is not financial advice.