9 ema trading strategy8/8/2023 ![]() ![]() Long term traders usually catch big moves. Position and swing traders may use a risk-reward ratio of 1:4 or more as their trades along with the term, so they will have high stop losses and take profits depending on their technical analysis of the trade. If you are an intraday trader and love day trade then your risk/reward ratio would be 1:2, so if your profit target is 50 pips, then your stop loss should be placed 25 pips from the entry point. On the other hand, if you are risking 20 pips, then your take profit would be 20 pips. For example, if you are a scalp trader, your risk/reward would be 1:1, so your stop loss would be the same as your take profit. Your trading style will determine your profit target and stop-loss placement. The course of action from when the 9 ema crosses above the 20 ema and a candle close above both the emas will be to open a buy trade. The image above illustrates a typical Buy setup. Buy setup on 9 ema and 20 ema crossover 9 ema and 20 ema-buy signal When the 9 ema crosses below the 20 ema, and a candle closes below both EMAs, open a sell trade. You can also use other confluences, such as price action patterns, to confirm if the setup is good or not. The image above illustrates a typical sell trading signal of 9 ema and 20 ema strategy. Typical sell setup 9 ema and 20 ema-sell signal May give late signals on higher time frames when the price has already moved. Lagging prices may fire exit signals late, leading to a draw down of profits. Sometimes EMA turns into a lagging indicator. Advantages and disadvantages of 9 ema and 20 ema strategy Advantages of ema crossover Disadvantages of ema crossover Weighted and gives accurate illustrations of current changes in price. Finally, position and Swing traders will prefer higher time frames such as the 4 hours or the daily chart because that fits their trading style.Įven though these traders may view the charts using different time frames, one thing that will stay constant is that the analysis and the signals will be the same. At the same time, intraday traders may focus mostly on the 15 minutes and 1 hour chart. ![]() For example, scalpers may use the 5 minute or 15 minute time frame to take trades using this strategy. The moving average crossover strategy works great for multiple trading styles and can also be used on multiple time frames because of the flexibility of moving averages. The premise is that when the 9 ema crosses above the 20 ema, then the price is in an uptrend and if opposite, or when the 9 ema crosses below the 20 ema, then the price is in an uptrend. The 9 ema and 20 ema forex trading strategy is based on the crossover of the emas mentioned above. What is the 9 ema and 20 ema trading strategy? Because there is huge demand or supply, the price has to be correct so that the accumulated contracts can fill. These places are important because there are always volumes of accumulated contracts around those price points, which is why price tend to reject and correct from there. Price points that have been corrected before are known as either support or resistance level. Once you identify trend direction, you look for areas where the price might be correct. When you research and develop trades, you have to first find the trend direction. Because higher time frame price moves are made up of the changes in price on the lower time frames, so you can’t necessarily take one’s importance away from the other, but instead, you have to use the lower time frame to see price action and higher time frame to see trend direction. Still, another thing is that higher time frames hold more weight in terms of the price change. ![]() Getting back to the 9 and 20 ema, you will recognize that when you view emas using high time frames like the 1 hour and 4 hour time frames, there isn’t much of a difference in terms of how close they are to price. 9 ema and 20 ema under the picture of different time frame So it is up to us to learn how and why price moves the way it does, and I can say from the research I’ve done that there isn’t a particular reason. ![]() The big lengthened Emas stipulates areas where recent price might return in the future because price behavior hasn’t really changed, and one thing for sure is that price always makes its way towards and away from the EMAs. Moreover, as I said in the above passages, its flexibility offers a broad perspective on the technical trading system. Retail traders and big institutions use EMAs, more specifically 9 ema and 20 ema, because of their ability to accurately depict trends. For this reason, it has become a trademark technical indicator. Exponential Moving Averages offer a stronger weighted indication of price movement. ![]()
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