Quad EMA Strategy by Admiral Markets Trading Camp
Contents About the Author 3 Strategy Description 4 Exponential Moving Average 5 Awesome Oscillator 9 MACD Indicator 13 Conclusion 19
About the Author Nenad Kerkez is a full time trader and dedicated analyst, well known on numerous websites for Forex trading as Tarantula. His Forex blog thread has gained over two million visits which currently puts Nenad s thread on the top 3 most visited topics. Nenad has been a professional trader for numerous years and his simple strategies will help you in establishing your own trading career.
Strategy Description Currency Pair: EUR/USD Time Frame: 5m Indicators: 176-Period Exponential Moving Average of Close Price (red) 144-Period Exponential Moving Average of Close Price (blue) 44-Period Exponential Moving Average of Close Price (red) 36-Period Exponential Moving Average of Close Price (blue) Awesome Oscillator MACD 3, 7, 1
Indicators Overview Exponential Moving Average
Exponential Moving Average Crossover 50, 100 EMA This crossover (50, 100 EMA) above gave a signal to buy, but traders need to develop the patience, and not to jump into a trade just because of the crossover.
Exponential Moving Average Moving averages (50, 100 EMA) crossover showed a sell signal but price retracted first
Exponential Moving Average Do you start noticing the pattern of Break OUT and REVERSE before moving in a direction of a crossover? Great! Also keep in mind that sometimes crossover happens directly on a breakout, which is the best signal for a trade. A few things to know in adjusting the MA: The smaller the N period numbers, for example 1, 3, 6 the more movements on the chart, hence the more unreliable the signals are If you want to eliminate the noise, use bigger moving averages numbers like 50, 100, 200 etc, since they give a complete picture of a trend without any interruptions. A combination of smaller and bigger moving averages can give the best outcome in trading.
Indicators Overview Awesome Oscillator
Awesome Oscillator This indicator was developed by the Bill Williams in his Chaos Trading System. Awesome Oscillator is used as a technical analysis indicator for generating buying or selling signals. It consists of a zero line and a green/red indicator on the chart. Awesome Oscillator is calculated by default as subtracting the 34-period simple moving average from the 5-period simple moving average. Signal for entry is a bar above the zero (o) line. Every bar in histogram which is bigger the a previous one is painted as green or every bar in histogram which is smaller than previous one is painted red. So if a bar is printed above the zero line we should look for a right moment to enter the BUY position, and if the bar is printed below the zero line Trader should look for a SELL position. The immediate break above and below the zero line doesn't mean that we need to enter the position immediately. This is a very good filter for any system, and should be used as one of the methods of confirmation.
Awesome Oscillator Example for a Buy position Price went from above the zero line, crossed it and started to build a momentum for a Buy position.
Awesome Oscillator Example for a Sell Position Breaking the Zero line on histogram give a signal to the trader to look for a SELL.
Indicators Overview MACD Indicator
MACD Indicator MACD (Moving Average Convergence Divergence) indicator is one of the most commonly used indicators in Forex trading. MACD was developed in the 1970s by Gerald Appel as an oscillator that graphically displays moving averages in relation to price. MACD falls into the same family as RSI, CCI and Stochastics, but this indicator can be used to assist traders with finding market momentum, direction, and entries by understanding the MACD line, the signal line, zero line and histogram. Before the MACD can become useful to us as traders, we first need to better understand its components. The MACD Line is displayed in blue in the indicator below and is built by comparing a 12 period EMA (Estimated Moving Average) to a 26 period EMA.
MACD Indicator By comparing moving averages of different durations we can change shifts in trend as it oscillates up and down. Our signal line is comprised of a 9 period EMA of MACD.
Quad EMA Strategy Entry Position Before we take a buy trade the two above criteria must be met. The 144 EMA must be above the 176 EMA and the 36 EMA must be above the 44 EMA. We then wait for AO to fall below the 0. The final trigger to the entry is when the MACD closes above the 0 line. Sell trade is vice versa. 36 EMA must be below 44 EMA and 144 EMA must be below 176 EMA. TAKE PROFIT and STOP LOSS 10-40 pips. I advise Pivot Point targets. STOP LOSS above/below last highest high
Quad EMA Strategy Buy example
Quad EMA Strategy Sell example
Quad EMA Strategy Rating 4.00/5.00 Conclusion This is a very good system especially for new traders. The system uses both AO and MACD and this combination gives good results on EUR/ USD. Other pairs and timeframes should be tested too.
camp@admiralmarkets.com