Exponential moving averages are useful when you want to allocate more weight to more recent observations when you compute your average.
The DataFrame.ewm() method can be used to compute the exponential moving average.
The method will require you to pass the decay parameter. (com)
Here is the code
# To work with dataframes import pandas as pd # To get the stock prices import yfinance as yf # We get the stock prices df = yf.download("AAPL", start="2021-01-03") # We compute the "20 days" exponential moving average df["ema_20"] = df["Adj Close"].ewm(com=20).mean() # We plot the ewm_20 along with the close price df[["ema_20", "Close"]].plot(title="20 days exponential moving average on AAPL stock price")
Here you are! You now know how to compute the exponential moving average with Pandas using Python.
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