Sunday, May 29, 2016

EMA Trading Strategy 200 EMA 50 EMA cross over l Built powerful system with EMA Crossover Strategy

Forex Trading Strategies-EMA Trading Strategy

One of the famous strategy that everybody should be aware of trading currency or any trading market is EMA trading strategy which is also know as "Moving Average Strategy", and the rules are simple when a particular period of EMA (Exponential Moving Average), cross other EMA of set period then we trade the cross in the direction of the price and we need to have some strict money management rules to trade any strategy and same rules applies to EMA trading strategy as well.

EMA trading system setup or Moving Average Crossover system

As we all know that every mechanical system is lagging but If we look in to the scenarios and apply few filters and look for overall sentiment then we can make any system as powerful as it can be and there are strict Forex Money Management rules that we need to follow while trading crossover.

Look at the following chart for example.

Forex trading systems

This is the Euro Dollar Chart of 20th June 2016, in which price is in strong bullish momentum after recent fall from the top but manage to cross the EMA period (35,20),and upward slope is solid and resistance turned out support is holding and that is what we should be looking to trade EMA Crossover strategy, in which price should test after cross and atleast make a new high in last 5 days, and today we saw a big opening up gap and price is looking to fill the gap and meantime testing the EMA as well, and If we see after testing Candle manage to close above the open and we set a pending buy limit 10 pips above the last candle high prices and set the stop 10 pips below the lower low of the signal candle, but make sure momentum does not fade out too much as there should not too much sideways movement after price has rallied high or even while price testing the EMA or support whatever suits the scenario.

Filters to be used in EMA Trading Strategy

***Price should make a new 5 days High and crossover should be strong

***Entry Should always be made at retest

***Price should never goes sideways after making a new 5 day high or while retesting EMA or Support or Resistance

***Entry Candle after retesting EMA or support or resistance should close above its open.

***Entry should be +/-10 pips above or below the low of Signal Candle and same rules stops should always be +/-10 pips of the same candle.

***Strict Forex Money Management Rules are the key to this cross over system and Risk to Reward should always be 1:2 or 1:3

Another Example of EMA Cross over strategy Gbp/jpy 20th June 2016

EMa strategy

We are here looking for another short setup in gbp/jpy which has managed to break below strong support zone and it also was the multi year low and we are still bearish to the pair till we get a strong weekly bullish candle signals the change in momentum.

However, we now need to see the chart if it fulfill all the necessary requirement that we mentioned in the above checklist as this went straight into the resistance and could be another trap if price manage to trade below the indecision candle.

200 Period EMA filters the Noise
Ema trading system, trend trading

Here is One EMA (200) period, which is used to filter the noise as it is the most used EMA world wide to see the slop of the trend up or down and IF 200 period EMA is flat, then there are lot of sideway movement can be expected, and one more thing I would like to mention here that in case of sudden reversals in overall large dominate trends, up or down price use to test 200 period EMA and use to reverse again after testing down the EMA.

There are numerous filters used with EMA throughout the world with success and one of the widely use filter is trendline and slope of EMA and trendline most probably filter the noise from the chart as it can only happens in strong trend, and trader use to target exotic pairs to trade EMA as usually they require less time to watch too many market data and spend tons of hours for setups. One thing is sure that there is no trend building up without Ema Crossover, but we have to decide which crossover we should use and what combinations we should use to make the system more powerful and hence worth using and making the system work for you in the long run.

Trade EMA with high low, ranges and breakouts and retests

EMA 200 Strategy,EMA Crossover system

The above Chart of Loonie tell us the power of 200 EMA cross over and we have to look for the slope and If it is too strong slop and we have ranges above or below, then we can have the idea while price reach and expect to react at EMA 200 period. EMA 200 is so powerful and IF you have knowledge and practice of low high, ranges and breakouts with support and resistance, then low risk entries can prove to be very strong risk reward opportunity.

In first case we have almost 2 months range, which make a new high and rejection from there made a strong base at 200 period EMA, as price went into tight channel while it test the EMA. And after price Rejects from 200 period EMA, it rallied. We can have the same scenario facing up in the next setup where we have tight ranges and rejection and price went into channel to test 200 period EMA and rejection from there price resume the trend and we can have large range or we can see large bearish trend resume from here and it could be very good opportunity IF we place the stops above the second rejection which was at S/R flip as well.

How we can use EMA 20,50,200 with Bollinger bands and Other indicators Step to step guidlines on how we can use EMA's of different value for day trading and for swing trading with the help of different indicators like RSI,Bollinger bands and Stochastic oscillator.

Here in this forex market there are several powerful trading system based on several indicators but ema forex trading strategy is vastly used and is included in almost every Forex strategy. If you are good at controlling risk and have patience to wait for entries on higher time frames then it is the nest way to use ema to filter trend and wait retest of ema and specially if it is a confluence or any fibonacci number or strong demand areas.

3 comments:

  1. Nice blog. It is nicely explain with graphs and how to use indicator. Love to use this strategy. Thanks for sharing.

    ReplyDelete
  2. Heya i am for the first time here. I came across this board
    and I find It really useful & it helped me out much. I hope to give something back and aid others like you
    helped me.

    ReplyDelete
  3. I am completely agree... Online trading makes trading conditions much easy. Trade from home, no need of brokers and many more. But before start trading it is important that you know every thing about trading and understand how to trade to make profit.

    ReplyDelete

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