You can now download the 50-200 EMA Forex Trading Strategy for free on AtoZ Markets indicators gallery.
The 50-period Exponential Moving Average (EMA) is one of the most widely used moving averages. It is a moving average which traders often use to determine the intermediate trend.
Longer-term traders use it, short-term traders also use it. As such, many of the characteristics of a moving average applies to the 50 EMA, such as determining trend direction and acting as dynamic support and resistance.
We will be using the 50 EMA as dynamic support or resistance. As soon as price touches the 50 EMA, we will be observing if the price would show signs of bouncing off it. We will also be using the zigzag arrows indicator as an entry signal, confirming that price is showing signs of bouncing off of a 50 EMA.
We will also be aligning our entries with the long-term trend direction using the 200 EMA. To qualify as a valid buy trade, price and the 50 EMA should be above the 200 EMA. The reverse applies if we are looking for a sell trade.
Indicators:
- 50-period EMA (green)
- 200-period EMA (brown)
- Zigzagarrows
Currency Pair: any
Timeframe: 5-minute chart and above
Trading Session: any
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How to trade with 50-200 EMA Forex Trading Strategy?
Buy (Long) Trade Setup Rules
Entry
- The 50 EMA should be above the 200 EMA
- Price should come from above the 50 EMA
- Wait for price to retrace and touch the 50 EMA
- The zigzagarrows indicator should print a blue arrow pointing up
- Enter a buy market order on the confluence of the above rules
Stop Loss
- Set the stop loss below the entry candle
Take Profit
- Set the take profit target at the swing high based on the preceding red zigzagarrow
Sell (Short) Trade Setup Rules
Entry
- The 50 EMA should be below the 200 EMA
- Price should come from below the 50 EMA
- Wait for price to retrace and touch the 50 EMA
- The zigzagarrows indicator should print a red arrow pointing down
- Enter a sell market order on the confluence of the above rule
Stop Loss
- Set the stop loss above the entry candle
Take Profit
- Set the take profit target at the swing low based on the preceding blue zigzagarrow.
How to download and install an indicator?
In order to install the indicator on your MT4 platform, you need to follow these steps:
- Click on “Download Indicator” button located at the top right corner of the screen.
- Save the file to your computer.
- Extract and move the files into MT4>Indicator folder of the MetaTrader4 software file directory.
- Restart your Metatrader platform.
- Navigate to “Indicators.”
- And select “50-200 EMA Forex Trading Strategy template to apply it on the chart.
Note: This indicator was developed by T. Morris. AtoZ Markets does not carry any copyrights over this trading tool.
Should you trade with the 50-200 EMA Forex Trading Strategy on your own at all?
Before you start trading with this strategy, you'll want to read this.
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