your way of trading Short-Term Moving Averages Strategy
Short-Term Moving Averages Strategy for short-term currency pairs GBP/JYP, Eur/Jyp and Eur/Gbp in 4 hours charts, 1 hour and 15 minutes. The indicator used for this strategy is the exponential moving average.
- EMA 5 Periods
- EMA 10 Periods
- 14 period EMA
- EMA 21 Periods
- EMA 50 Periods
Description of Short-Term Moving Averages Strategy
The strategy is divided into three stages-
- Step 1: Actions taken before trading
- Step 2: Actions taken Trading System
- Stage 3: Actions to be taken after trading
Step 1: Actions to be taken before trading-
The concept of short-term moving averages strategy trading system is based on exponential moving averages (EMA), Analysis of 3 Charts. This system can work perfectly in other currency pairs, but the strategy has best in the GBP/JPY, EUR/JYP and EUR/GBP pairs.
Before anything consider the following steps:
- Determine the lot size – it all depends on the size of their capital.
- Set Take Profit around 50-70 pips.
- Trading a currency pair at any one time and not several, i.e. GBP / JPY or EUR / GBP.
- Start analyse charts 15 minutes, 1 hour, 4 hours. Timeframe of 15 minutes, 1 hour and 4 hours are the time frame recommended in the strategy. In its trading platform should only concentrate these time frames and any of the previously specified pairs.
Adding exponential moving averages to graph is as follows:
Exponential moving averages are weighted averages like moving, both indicators assign greater weight to the most recent data. The purpose of using these particular moving averages is to identify the market trend. A common method is to look in the direction of the moving average and the relationship between the price of the moving average. For example, if the moving average is declining, and prices are below the moving average, the market is considered in a downtrend, the opposite trend for upward move.
To generate a signal to buy or sell and go into the direction of the trend, start by looking crossings exponential moving averages in the timeframe of 15 minutes up / down the 50 EMA periods. The EMA of 50 periods will help you determine the longer-term trend.
Step 2: Actions to be taken of the trading system
To detect an opportunity in the market, is necessary to detect the upward or downward direction (trend) price, for this use the 4-hour chart and see if the price is above or below the EMA of 50 periods or above or below the 21-period EMA.
Always seek market direction before trading, it should trade in favor of the general trend. To know where the market is headed in the short term, use the time frame of 15 minutes, the EMA of 5, 10 and 14 EMA always you have the answer to that question.
When these EMAs are crossing either bullish or bearish EMA of 50 periods in the TF 15 minutes, you can prepare to enter the market in a resumption of the long-term movement.
When the 5 EMA and the 10 EMA crossed bullish and bearish clear cut chances in the 14 and 21 EMA periods, do not take these crosses as signals because the market is neutralised or ranging.
Buy and Sell Entry Rules–
The rules are very simple and require patience on your part.
- Identify the trend in boxes 4 hours
- Wait for the crossing towards the greater tendency in Tables 15 minutes up / down EMA50
- The TakeProfit set at 50 or 70 pips.
- The StopLoss will be located at the minimum / maximum newest or below / above the EMAs
- Confirm the signal box 15 minutes to 1 hour chart, on the one hour chart EMA 5, 10 and 14 periods should be crossing the EMA of 21 periods.
- You can keep the position if the 5-period EMA does not cross the 10-period EMA, this brings the advantage of an increase in takeprofit.
The steps above apply to buying and selling.
NOTE: The stoploss should not be over 50 pips since the entries are made in the timeframe of 15 minutes.
Trading a BreakOut:
- Wait for the cluster of moving averages,
- Trace support and resistance and allow the momentum (BreakOut)
Step 3: Actions after Trading.
- Summarize your daily trading.
- Record losses and gains.