5 And 13 Exponential Moving Average Profitable Forex Strategy ~ forex trading tips and tricks
Strategy
Take from Fibonacci sequence numbers 5 and 13 as the parameters for moving averages. When you wish to determine the price movement, the time for opening and closing the positions, use Exponential
Moving Average (EMA) 5 and 13 indicators and follow these rules:
Open the position when EMA5 has crossed EMA13.
Buy when EMA5 has crossed EMA13 from below.
Sell when EMA5 crosses EMA13 from above. Wait until the time interval (selected by you) closes. If by this time EMA5 and EMA13 have crossed each other, enter the market at the price of opening the following time interval.
When opening the position – at the same time – you should place stop loss order below/above EMA13.
Close the position in case:
a) the closing price showed crossing or equality of EMA5 and EMA13;
b) the prices reached the level of your stop order.
These rules can be applied to all time interval. However the best results are achieved with one-hour
charts.
The following picture illustrates the rules.
To improve the results of your Forex trades, use these crucial rules: Place your stop orders at 50 pips level from EMA13, binding this level to EMA13 movements; of course, if the market trend goes as it was expected.
This tactics will give you the possibility to avoid non-predictable market movements.
Do not open the position if there is a gap of more than 100 pips between the opening price and the level of stop loss order. This rule will protect you from big market movements which take place during a very short time interval (see below image)
Do not open the position when there is only 1 pip between EMA5 and EMA13. Wait until the time interval is closed with more sufficient difference between EMA5 and EMA13 (see below image)
You should set up for yourself a certain maximum sum which you are ready to lose on every trade (risk percentage). It should not be more than 10% of the total sum on your account.
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