How to calculate EMA based on previous candles?

<p id="isPasted">To calculate an Exponential Moving Average (EMA) based on previous candles, you must apply a mathematical formula that places more weight on the most recent candle data. Unlike a Simple Moving Average (SMA), which treats all candles equally, the EMA reacts faster to recent price changes.&nbsp;</p><p>Here is the step-by-step calculation process.</p><p><strong>Step 1: Calculate the SMA (The Baseline)&nbsp;</strong></p><p>You cannot calculate an EMA without a starting point. For your very first data point, you must find the Simple Moving Average of your chosen period.&nbsp;</p><p>Example: For a 10-period EMA, add the closing prices of the first 10 candles together and divide by 10.&nbsp;</p><p><strong>Step 2: Calculate the Multiplier (Weighting Factor)&nbsp;</strong></p><p>Next, determine the smoothing multiplier. This multiplier dictates how much weight is given to the most recent candle.&nbsp;</p><p id="isPasted">Formula: Multiplier = 2/(period+1)</p><p>Example: For a 10-period EMA, the calculation is: 2/(10+1) = 2/11= 0.1818 (or 18.18%).&nbsp;</p><p id="isPasted"><strong>Step 3: Calculate the Current EMA</strong></p><p>Now, use the multiplier and the previous candle's EMA to calculate the current candle's EMA</p><p>Formula: EMA Today = (Close today x multiplier) + (EMA yesterday x (1-multiplier))</p><p><br></p><p id="isPasted"><strong>🧮 Practical Example (10-Period EMA)</strong></p><p>Imagine you want to calculate the EMA for the current closing candle:</p><ul><li>Current Candle Close: $115</li><li>Previous Candle's EMA: $110</li><li>Multiplier: 0.1818</li><li>The Calculation:<ul><li>(115 x 0.1818) + (110 x (1- 0.1818))</li><li>20.907 + (110 - 0.8182)</li><li>20.907 + 90.002 = 110.91</li></ul></li></ul><p>The current EMA value for your chart is $110.91.&nbsp;</p><p><br></p><p id="isPasted"><strong>💻 Code Implementation (TradingView Pine Script)</strong></p><p>If you want to automate this or build it into the consecutive candle alert code provided earlier, TradingView has a built-in function (ta.ema) that handles this chain mathematical logic instantly:&nbsp;</p><p>pinescript</p><p>//@version=5</p><p><em>indicator("Custom EMA Calculation", overlay=true)</em></p><p><em>// Input for the user to select the candle period</em></p><p><em>emaLength = input.int(10, title="EMA Length")</em></p><p><em>// System automatically calculates the multiplier and chain math</em></p><p><em>customEMA = ta.ema(close, emaLength)</em></p><p><em>plot(customEMA, color=color.blue, title="My EMA")</em></p>