This strategy will make a lot of sense to traders who are at an intermediate level of trading. It is totally mechanical in nature and requires a thorough understanding of technical indicators of MT4 or MT5. The strategy can almost be used on any time frame, but a larger one is preferred, 1 hour or higher.

This means the strategy is not suitable for trading during the day. As said, we will use five different Exponential Moving Averages and one Relative Strength Index RSI. This is the reason we need to be well versed in the technical indicators.

This strategy can be used with any currency pair. Also, with few commodities as well. Liquidity will not be an issue here since we are trading on the higher time frames. Firstly, we use period EMA to identify the major trend of the market. If the price is above 80 EMA, we say that the market is in a bull market, while if it is below the 80 EMA, the market is in a bear market.

Secondly, we use the period and period EMA to point out the current trend direction, meaning, the current minor trend within the major trend. If the EMA with a shorter period is above the one with the longer period, we have a minor bull trend, and vice versa. These are the 3-period EMA and 5-period EMA. The crossing of these two EMAs supported by the appropriate value of RSI, tells us whether to go long or short in the currency pair. However, a more conservative approach would be by ignoring the entry signals, which are in the opposite direction of the major trend.

Also, the period EMA must be below the price action discussed above, and RSI must have a value exceeding We execute the trade once the signal bar closes beyond the 5-period EMA.

This must be coupled with an RSI value below 50, and period EMA be above the price action. Since this a trend-based strategy, the first step is to identify the major direction of the market using the period EMA. It is important that the price remains above the EMA for at least four consecutive higher highs and higher lows before we can call it an uptrend.

Likewise, the price should be below the period EMA for a minimum of 4 lower lows and lower highs. Once we have identified the trend, we need to wait for a price retracement that could give us an opportunity to enter the market and ride the trend. We need to evaluate if this a true retracement or the start of a reversal. Along with this, at the entry bar, the RSI should be above the 50 levels, and both the 3 and 5 periods EMA should cross the EMA channel.

Once all of these conditions are fulfilled, we can take a risk-free entry into the market. Once we have entered the trade, we need to determine the stop-loss and take-profit levels. A single moving average gives you the general trend of price movement. However, a lot of traders typically use two or more moving averages to gain a better feel for main direction and to trigger more precise entries or exits in the market.

So here we have a 1-min chart of EUR JPY, which displays three exponential moving averages: the 50, , and period averages. Of course, this is my preference. I prefer to use longer term EMAs, to try to eliminate the inevitable market noise. Any number of period combinations can be used, depending on the types of setups you are looking for and the timeframes you are trading. Right here, the price eventually broke below the period EMA, which signaled short-term weakness, but bounced off the period EMA before resuming the uptrend, thereby confirming the medium and long term strength.

Until the price breaks below the period EMA, the bullish trend will remain intact. After we identified the main direction, we need to wait for a pullback. The idea of the pull-back trade is to buy the market at a discount during an uptrend, and sell the market at a premium during a down trend. The goal of the pull-back trade is to take advantage of situations when price is in an established trend, either bullish or bearish, and all three moving averages are indicating the same direction.

Any pull-back to the first or second EMA offers a buying or selling opportunity back in the direction of the established trend. This setup is effective because it forces you to buy below value and sell above value, while keeping you disciplined to the existing trend.

Now, how to enter a trade? So the first step, the most important one, is to identify the current trend of the market. However, any slope ranging from to degrees will work just fine. The second step involves waiting for the market to pull back to test either the or period EMA.

Price can close beyond the period EMA, but you generally do not want price to close beyond the period EMA, or to be near the EMA. Once price tests either of the moving averages, we need price confirmation. The entry is triggered when price closes back in the direction of the current trend, beyond the period EMA. How to manage the trade. There are many exit tactics that can be used for the pull-back trade.

Before you select the type of exit strategy, you should first remember you are scalping. The room for error is extremely small. Let me repeat that: margin for error is very small when you trade with high leverage while looking for a small profit.

You want to diminish your risk. It will happen. But this will protect you in the long run. This chart illustrates a perfect example of choosing a currency pair during an established trend. Trading in the direction of an established trend increases your chances for a profitable outcome. Enable predictions. Once price dips above the first EMA, we look for price to close back below the period average in order to trigger a long position, which occurred several times in this chart.

Also remember that you can use any period moving average you like to manage your trades! You could back test different settings, and adapt the period of the EMAs to fit your style. Once in the trade, i immediately set my loss stop below the low of the pull-back i am trading. Therefore, your stop loss would be beneath the low of the bar that tested the 50 or period EMA.

Previously, we discussed several trading strategies that involved a combination of different indicators, but the number did not exceed two or three.

This strategy will make a lot of sense to traders who are at an intermediate level of trading. It is totally mechanical in nature and requires a thorough understanding of technical indicators of MT4 or MT5. The strategy can almost be used on any time frame, but a larger one is preferred, 1 hour or higher. This means the strategy is not suitable for trading during the day.

As said, we will use five different Exponential Moving Averages and one Relative Strength Index RSI. This is the reason we need to be well versed in the technical indicators.

This strategy can be used with any currency pair. Also, with few commodities as well. Liquidity will not be an issue here since we are trading on the higher time frames. Firstly, we use period EMA to identify the major trend of the market. If the price is above 80 EMA, we say that the market is in a bull market, while if it is below the 80 EMA, the market is in a bear market.

Secondly, we use the period and period EMA to point out the current trend direction, meaning, the current minor trend within the major trend. If the EMA with a shorter period is above the one with the longer period, we have a minor bull trend, and vice versa. These are the 3-period EMA and 5-period EMA. The crossing of these two EMAs supported by the appropriate value of RSI, tells us whether to go long or short in the currency pair.

However, a more conservative approach would be by ignoring the entry signals, which are in the opposite direction of the major trend. Also, the period EMA must be below the price action discussed above, and RSI must have a value exceeding We execute the trade once the signal bar closes beyond the 5-period EMA.

This must be coupled with an RSI value below 50, and period EMA be above the price action. Since this a trend-based strategy, the first step is to identify the major direction of the market using the period EMA. It is important that the price remains above the EMA for at least four consecutive higher highs and higher lows before we can call it an uptrend. Likewise, the price should be below the period EMA for a minimum of 4 lower lows and lower highs.

Once we have identified the trend, we need to wait for a price retracement that could give us an opportunity to enter the market and ride the trend. We need to evaluate if this a true retracement or the start of a reversal. Along with this, at the entry bar, the RSI should be above the 50 levels, and both the 3 and 5 periods EMA should cross the EMA channel.

Once all of these conditions are fulfilled, we can take a risk-free entry into the market. Once we have entered the trade, we need to determine the stop-loss and take-profit levels.

For this strategy, the take-profit and stop-loss are placed in such a way that the resultant risk-to-reward of the trade is 2. Combining two or more technical indicators has always proven profitable for traders. Since there are many rules and requirements for the strategy, the probability of occurrence of trade-setup is less, but once formed, it can provide amazing results. Save my name, email, and website in this browser for the next time I comment.

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You can upload: image , audio , video , document , spreadsheet , interactive , text , archive , other. Top Download Forex Strategies. FREE Trading Signals. However, the best EMA setups are when both exponential moving averages show the same thing. The EMA outperforms the SMA by putting more weight on the recent price action.

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