The 28 and 100 EMA Forex Trading Strategy EMA Forex Trading Strategy is a basic trading method. It is simple and easy to use and yet can provide very positive results. This EMA Forex Trading Strategy is recommended mainly for intraday traders but can be also used in longer time frames. Below are the basic rules and set up you should use.
Set Up for 28 and 100 EMA Forex Trading Strategy.
Indicators in use: 100 EMA, you can make it in green color and 28 SMA (Smoothed moving average) which can be marked in red.
Recommended time frames: Use the 1H and 4H charts.
Recommended currency: any currency might be traded with this EMA forex trading strategy. But I recommend to apply it mainly on majors, as the EURUSD.
Entry signal: The longer period EMA (100), represents the trend in the relevant time frame. Let’s assume that the trend is heading down, and it’s clearly indicated by the 100 EMA. When the candlestick will close above the 100 EMA then it’s a signal for going LONG. When the candle will close below the 28 SMA, it would be a signal to close the trade. When the vice versa happens, it’s a going SHORT signal.
Exit level: In this EMA Forex trading strategy, I recommend using a stop-loss of 45 to 55 pips on 1H time frame and the take profit would give the correct risk – reward ratio, with 70 to 100 pips. If you prefer trading on 4H or even 1D time frame, then your stop-loss target should be at around 100 pips and the take profit should be located on 200 to 500 pips from the entry point.
Advantages of the 28 and 100 EMA Forex trading strategy – it is a trend based method and as you know the trend is usually a really good friend.. It is also very easy to understand and to follow method.
Disadvantages are that high quality signals are difficult to recognize because of very limited parameters. As all the trend strategies, is not suitable to high volatility moments and therefore, a follower of this strategy should avoid keeping open positions before and during important financial news releases.
Learn also how to use the Stochastic and EMA Crossover Trading Strategy.