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Simple strategy with 2 different EMA

The strategy with 2 different EMA is a relatively simple, but a very common strategy used in forex trading. The simplicity does not detract its effectiveness in trading, if used properly.

Set up the indicator in MT4

The strategy is based on a H1 chart, one-hour presentation per Candle the chart. When the chart is set on H1 we go to the indicators, which are included in MetaTrader4. You'll find them when you go to "View" in the main menu and choose "Navigator". Selecting this will open another window, on the left side in the software. Here you will select "Indicators" and look for the "moving average". In the now opened dialog you can set the parameters for the indicator. Set the value for the period on 5, as the MA method, select "Exponential" and select a color for the graphic representation as yellow and then click "Ok". Now the first EMA lies as a yellow line in front of the candlesticks. Now open the parameter window again by clicking on "Moving Average". As Period you have to enter 15, the MA method is "Exponential" again and you select the color red. If all settings are correct, it should look similar like in the example image below.


Identify a trading opportunity in the chart

Now it is important to determine a trading opportunity and our entry point. This is very easy to identify in this strategy. When the red line, MA-15 crosses the yellow line, MA-5, downwards, this is a signal to open a short position. And it is a signal to open a long position, when the red line crosses the yellow line upwards.

Now, when you set the Stop/Loss, you should be aware that there can always be a back swing. This does not always mean a change in trend. In the example image can be seen clearly. The question when you have to close the position cannot be answered not in general, because this can vary from Trader to Trader. A relatively safe signal to close the position could be, when the red line cross the yellow again, in the opposite direction.

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