EMA is very common tools to all traders. There are many strategies by EMA. This strategy is very simple and easy to find trading opportunities for all kind of traders. New traders do not need any analysis for applying this strategy. They need to follow the rules of this strategy and they earn pips easily.
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You need to set-up the chart manually for this strategy. You need three mt4 default indicator:
1. 80 EMA (Exponential Moving Average of the close price)
2. 40 EMA (Exponential Moving Average of the close price)
3. CCI-14 period (Commodity Channel Index)
1st rule: You can only find buy opportunities when 40 EMA is above the 80 EMA. Similarly you can find sell entry when 40 EMA is below the 80 EMA.
2nd rule: If you trade on H1 time frame or below this time frame, then it will be consider as intra-day trading. For trading with lower time frame, you need to find buy/sell opportunities in the London and US session. If you trade on H4 time frame, then session is not any fact. You can trade anytime when you will get any signal.
3rd rule: The third is how you will find signal from this strategy.
Buy signal: When 40 EMA is above the 80 EMA, you can take buy when CCI cross 0.0 level from below to above.
Sell signal: When 40 EMA is below the 80 EMA, you can take sell entry when CCI cross 0.0 level from above to below.
Stop loss and take profit: Stop loss will be based on your time frame. If you use lower time frame, then you can use 20-30 pips stop loss. For higher time frame, you can set 50-60 pips stop loss. Take profit should be 1:2 risk ratio. Sometimes you can get 1:5 risk ratio from this trading strategy.
Currency pair: All types of major and cross pairs.
Risk warning: You must need to follow money management rules. You can take 1% risk for each trade. Before applying this strategy you should practice this strategy on demo account for 2-3 months. If you are satisfied with this, then you can apply to your real account.