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 basically consists of taking trades using two or more moving averages that cross over.

Let's say we have a crossover between two Exponential Moving Averages. We buy when the 7 EMA crosses over the 21 EMA. This is because we believe the market is turning bullish. We sell the pair if the 7 EMA crosses below 21 EMA because we believe that a downtrend has begun.

We know that we need to filter trade setups in order to make them more profitable. To do this, we will use a custom indicator.

We will use the Octopus 2 custom indicator. This indicator is great at determining direction bias and would also be useful in filtering crossover situations. Three exponential moving averages will be used for our moving averages. This will enable us to filter more trades. We want the moving averages to be properly stacked before we enter any trade.

Indicators:

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

Timeframe: h1 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 print green bars to indicate a bullish bias
• The moving averages should cross over and stack in this order
  • 8 EMA: Top
  • 13 EMA: middle
  • 28 EMA: Bottom
• At the confluence the above rules, you can enter a buy-market order

Stop Loss

• Place the stop loss lower than the moving averages

Exit

• If one of these scenarios occurs, close the trade
  • The Octopus 2 indicator begins printing red, indicating a change of bias
  • The proper order of the EMA stack is disrupted by a crossover between EMAs

Short Trade Setup Rules

Entry

• The Octopus 2 indicator should print red bars to indicate a bearish bias
• The moving averages should cross over and stack in this order
  • 28 EMA: Top
  • 13 EMA: middle
  • 8 EMA: Bottom
• At the confluence the above rules, you can place a sell order

Stop Loss

• Place the stop loss at the top of the moving averages

Exit

• If one of these scenarios occurs, close the trade
  • The Octopus 2 indicator begins printing green, indicating a change of bias
  • The proper order of the EMA stack is disrupted by a crossover between EMAs

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