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Ema Trading Strategy
What Is Moving Average ?
Moving average is an indicator that can apply to your charts that helps smooth out the price by removing the fluctuations surrounding the price movement.
A Moving average will calculate the average price of the security or a given time.
If the price is moving above the moving average, it indicates the buying signal.
If the price is moving below the moving average, it indicates the sell signal.
But the same moving average is not going to be profitable at all stocks at all times.
So to know which moving average would work best on which security, one needs to perform backtesting.
Once we can find the moving average, in which we can make profits, we will trade with the help of that profitable signal.
The specific moving average we use is the exponential moving average.
Lenght of the exponential moving average is 20.
How To Apply 20 EMA In A Trading Platform? Ema Trading Strategy
Go to your indicators
Find the exponential moving average/ moving average exponential and add it to your charts
Set the length to “20.”
We will use the indicators for the confirmation and support in trade; our price action strategies are fixed for a trading day to execute the transaction.
Why Do We Use Ema Trading Strategy? Ema Trading Strategy
Moving averages will confirm whether the market is in bullish mode or bearish mode, or sideways.
How to predict the exponential moving average strategy?
When the 20 EMA is above price, it represents a possible bearish in a downtrend.
When the 20 EMA is below the price, it represents a possible bullish uptrend.
When the 20 EMA is going through the price, it represents that the market is sideways.
The second reason for the usage of moving average is a breakout of EMA will be the trend change, whether it is towards the bullish or bearish side.
For example, if we were on an uptrend and the stock price broke the EMA towards the bullish, the trend would change towards the bullish move.
If we were on a downtrend and the stock price broke the EMA towards the bearish, it would be the trend change towards the bearish move.
We can use the moving averages because the EMA can act as a form of support and resistance.
For example, if the trend is bullish, EMA will act as a support.
If reliance buys entry has been placed, at a price 2000, 20 EMA has located at the cost of 1980, that EMA will act as strong support.
If the stock breaks the 1980 price, you can exit the trade, because in most probable cases, trend reversal will occur.
For example, if the trend is bearish, EMA will act as a resistance.
If reliance sell entry has been placed, at a price 2000, EMA has located at the cost of 2020, that EMA will act as solid resistance..
If the stock breaks the 2020 price, you can exit the trade because trend reversal will occur in the most probable cases.
Use these as ideologies and not the law, because again, we do not use moving averages on their own for trade entries.
We pair them with what we have already established with price action to increase trade quality.
There are two ways to use the 20 EMA
- Trend trading
- Reversal trading
Trend Trading In Ema Trading Strategy
In a bullish trend, if the price is making higher highs and higher lows by making an uptrend.
Finally, the price had reached the 20 EMA, that 20 EMA will act as support.
In most cases, the price will bounce back by taking the support of 20 EMA.
In a bearish trend, if the price is making lower lows and lower highs by making a downtrend.
Finally, the price had reached the 20 EMA, that 20 EMA will act as resistance.
In most cases, the price will bounce back by taking the resistance of 20 EMA.
Reversal trading In Ema Trading Strategy
The price is on an uptrend and moving towards the bullish side
In reversal trading, when the price reaches the 20 EMA, as in trend trading, it will not bounces back every time.
20 EMA breakout shows bearish price action, and signals will be a possible trend change.
Price made the first lower low, another signal of bearish price action, and a trend change is equal to trade with the fresh downtrend.
It will reverse towards the bearish side.
The price is on a downtrend and moving towards the bearish side
In reversal trading, when the price reaches the 20 EMA, as in trend trading, it will not bounces back every time.
20 EMA breakout shows bullish price action, and signals will be a possible trend change.
Price made the first higher highs, another bullish price action signal, and a trend change is equal to trade with the fresh uptrend.
It will reverse towards the bullish side.
For intraday traders, I recommend 20 (EMA) for Ema Trading Strategy .
For positional traders, I recommend a 50 (EMA) for ema trading strategy.
For intraday traders, the recommended time frame is 5 minutes.
For positional traders, the recommended time frame is the daily time frame.
My suggestion is to learn any trading course and trade according to your analysis.
Our recommended course will help to develop your trading skills.
LEARNING AND ANALYSING THE MARKET IS THE KEY TO BE A SUCCESSFUL TRADER.
If you are interested in the trading course and most probable trades, you may contact us to be a profitable and most probable trader.
Our recommended course will be helpful to improve your trading skills.
The original program will be in our private group for a trading course.
For applying these EMA trading strategy the best platform is a trading view
I am not a trainer; in the stock market, there are no trainers; all are learners.
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