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EMA Crossover Forex Trading Strategy

Amandeep Sonewane | Aug. 28, 2019
EMA Crossover Forex Trading Strategy

You can now download the EMA Crossover Forex Trading Strategy for free on AtoZ Markets indicators gallery.

EMA Crossover Forex Trading Strategy is basically a trading strategy based around taking trades as two or more moving averages crossover.

For example, let’s take a crossover of two Exponential Moving Averages (EMA), a 7-period EMA and a 21-period EMA. Whenever the 7 EMA crosses above the 21 EMA, we assume that the market is becoming bullish, thus we buy on the crossover. On the other hand, whenever the 7 EMA crosses below the 21 EMA, we sell the pair because we are assuming that a downtrend is taking place.

Knowing that in some way or another, we would have to filter our trade setups, we will make use of a custom indicator to filter our trades.

The indicator that we will be using is the Octopus 2 custom indicator. This indicator seems to excel in determining direction bias, which would be great in filtering out crossover setups. As for our moving averages, we will be using three exponential moving averages. This approach will allow us to filter even more trades as what we are looking for is for the moving averages to be stacked properly before we enter a trade.

Indicators:

  • 8-period EMA: Green
  • 13-period EMA: Blue
  • 28-period EMA: Red
  • Octopus 2 custom indicator

Timeframe: 1-hour chart and above

Currency Pair: any

Trading Session: any

How to trade with EMA Crossover Forex Trading Strategy? 

Buy (Long) Trade Setup Rules

Entry

  • The Octopus 2 indicator should be printing green bars indicating a bullish bias
  • The moving averages should crossover and stack in the following order
    • 8 EMA: top
    • 13 EMA: middle
    • 28 EMA: bottom
  • Enter a buy market order at the confluence of the above rules

Stop Loss

  • Set the stop loss below the moving averages

Exit

  • Close the trade if any of the two scenarios occur:
    • Octopus 2 indicator starts printing red indicating a change in bias
    • A crossover among the EMAs occurs disrupting the proper order of the EMA stack

Sell (Short) Trade Setup Rules

Entry

  • The Octopus 2 indicator should be printing red bars indicating a bearish bias
  • The moving averages should crossover and stack in the following order
    • 28 EMA: top
    • 13 EMA: middle
    • 8 EMA: bottom
  • Enter a sell market order at the confluence of the above rules

Stop Loss

  • Set the stop loss above the moving averages

Exit

  • Close the trade if any of the two scenarios occur:
    • Octopus 2 indicator starts printing green indicating a change in bias
    • A crossover among the EMAs occurs disrupting the proper order of the EMA stack

How to download and install an indicator?

In order to install the indicator on your MT4 platform, you need to follow these steps:

  1. Click on “Download Indicator” button located at the top right corner of the screen.
  2. Save the file to your computer.
  3. Extract and move the files into MT4>Indicator folder of the MetaTrader4 software file directory.
  4. Restart your Metatrader platform.
  5. Navigate to “Indicators.”
  6. And select “EMA Crossover 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.

Disclaimer: The views and opinions expressed in this article are solely those of the author and do not reflect the official policy or position of AtoZ Markets.com, nor should they be attributed to AtoZMarkets.