An exponential (or exponentially weighted) moving average is calculated by applying a percentage of today's closing price to yesterday's moving average value. Exponential moving averages place more weight on recent prices.

For example, to calculate a 9 percent exponential average of IBM, you would first take today's closing price and multiply it by 9 percent. Next, you would add this product to the value of yesterday's moving average multiplied by 91 percent (100% - 9% = 91%.)

(Today's Close *0.09) + (Yesterday's Moving Average *0.91)

Because most investors feel more comfortable working with time periods rather than with percentages, the exponential percentage can be converted into an approximate number of days. For example, a 9 percent moving average is equal to a 21.2-time-period (rounded to 21) exponential moving average.

The formula for converting exponential percentages to time periods is:

Time periods = (2 : Percentage) - 1

You can use the above formula to determine that a 9 percent moving average is equivalent to a 21-day exponential moving average:

21.2 days = (2 : 0.09) - 1

The formula for converting time periods to exponential percentages is:

Exponential percentage = 2 : (Time Periods + 1)

You can use the above formula to determine that a 21-day exponential moving average is actually a 9 percent moving average:

0.09 = 2 : (21 + 1)