EMA system is a moving average based forex trading strategy. EMA system is a trend following forex trading strategy. This system is very simple and very easy to use. Any trader with basic knowledge of forex trading strategy and metatrader platform can use this trading system to consistently make money in the foreign exchange market. Main signal for our trading will be the moving average crossovers and MACD and CCI will be used as a confirmation tools for our trading signal. This trading system can be used in any time frames but a time frame higher than 15 minutes is recommended since the market direction becomes clear in the higher time frames. This method works for you only when you follow the rules with strict self discipline. You cannot succeed if you don’t stick to the rules of the system.
Let’s get back to the EMA system. EMA system consists of six technical indicators which will help us to make our trading decision in the market. When the EMA system is correctly installed on your trading platform your chart should look like this:
- Moving Average: Moving Average is used to find the direction of the trend. EMA system uses three moving averages with different periods.
- EMA 5: EMA 5 (blue) is the fastest moving average used in this trading system.
- EMA 6: EMA 6 (Golden) is the second fastest moving average used in this trading system.
- SMA 35: SMA 35 (white) is the slowest moving average used in this system.
- Parabolic SAR: Parabolic Sar is a technical indicator. It helps us to confirm our trade. It appears below and above the price bars.
- MACD: MACD is moving average convergence divergence. MACD crossovers are used to confirm the trades and to know the strength of the bulls and bears.
- CCI: CCI which stands for Commodity Channel Index is used for figuring out the overbought and oversold conditions of the market and strength of the trend.
Buying Conditions Using EMA System.
- Price should be above all the moving averages.
- Price should be above the parabolic Sar.
- MACD histogram should cross above the red line and MACD should be in positive territory.
- CCI indicator should move in to the positive territory.
- Place your stop just below the recent swing low.
- Take your profits as soon as the price bar closes below the moving averages.
Selling Conditions Using EMA System.
- Price should be below all the moving averages.
- Price should be below the parabolic Sar.
- MACD histogram should cross below the red line and MACD should be in negative territory.
- CCI indicator should move in to the negative territory.
- Place your stop just above the recent swing high.
- Take your profits as soon as the price bar closes above the moving averages.
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