What is an EMA?
EMA stands for “extended maintenance agreement,” a maintenance contract for IDEXX diagnostic equipment, testing equipment, computer systems and software. EMA fees are billed quarterly in advance and cover the three months following the date of the invoice, or monthly in advance covering the following 30 days. The contract dates and coverage period are indicated in the description section of the invoice.
When we refer to the EMA, we will always be referring to a 20-period exponential moving average. This line can be thought of as a proxy for a “regression to the mean” in a trending market. It has little value in a trading range market. Unlike a simple moving average, which takes the average price of the last ‘X’ periods, the EMA method takes a weighted average of the most recent price and the average price from the bar before.