Forex Trading Strategy for Cross Between EMA

The following forex trading strategy is very simple and is based on a cross between two exponential moving averages, a fast and a slow.
We must in advance to emphasize that such a forex trading strategy appears to have the most important disadvantage that is ineffective in sideways markets.

We can use this forex trading strategy in any forex pair and at any timeframe.

The indicators which we will use are the following:

• EMA (9) - Exponential Moving Average. Apply to close.
• EMA (14) - Exponential Moving Average. Apply to close the candle.

Buy Rules

We place a long position (buy forex signal) when the EMA (9) crosses the EMA (14) from bottom to top.

Stop Loss

The use of stop loss level is considered essential, and should be placed at the low point of the last candle before happen the crossing of the two exponential  moving averages.

Take Profit

The determination of the level to which it may become profit taking is directly related to the distance of stop loss level from entry point. The proposed relationship is :  Take Profit = 1.5 x Stop Loss or even better : Take Profit = 2 x Stop Loss. It should be noted that if any other intersection happen between the exponential moving averages without activating the level of stop loss or take profit should be close our trading position and get out of the market.

Sell Rules

We place a short position (sell forex signal) when the EMA (9) crosses the EMA (14) from top to bottom.

Stop Loss

The use of stop loss level is considered essential, and should be placed at the high point of the last candle before happen the crossing of the two exponential  moving averages.

Take Profit

The determination of the level to which it may become profit taking is directly related to the distance of stop loss level from entry point. The proposed relationship is :  Take Profit = 1.5 x Stop Loss or even better : Take Profit = 2 x Stop Loss. It should be noted that if any other intersection happen between the exponential moving averages without activating the level of stop loss or take profit should be close our trading position and get out of the market.

Notes

Once more it should be noted that the disadvantage of this forex trading strategy is the inefficiency in a market that moves sideways. Of course we must note that the moving averages show significant delay in comparison with the price action. In fact first moves the price and then will move the moving averages with reasonable delay.

Important : All investors should know that any forex trading strategy before implementing in a real account needs to be tested in a demo account in order to be fully understood.

Also, all traders should be aware that extraordinary events occurring in the forex market very often, and is likely to alter the financial results of a forex trading strategy.

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