Trading currency is not as easy as it looks and there are many things you should learn and understand so you will not make any mistake that will give you huge loss. One term you should know is EMA or known as Exponential Moving Average. Many beginners don’t understand about it but it plays the big role in the data. EMA is the Moving Average type or MA that places the great significant weight on the recent data. EMA can also be referred as weighted moving average exponentially.
What to Know About Exponential Moving Average?
EMA or known as Exponential Moving Average will react significantly to the recent data changes than the SMA or Simple Moving Average which may apply the same weight to all types of research or observation in the period time. However, the beginners don’t need to be confused and you just have to remember 3 important things about EMA such as:
• EMA is the moving average or MA which places the huge weight and also significance on the recent points of the data • EMA is just similar to other moving average types and the technical indicator will be used to produce the sell and buy signals based on the divergences and crossover from historical average. • The traders use many types of EMA differently in terms of the days such as 20 days, 30 days, 90 days even 200 days of the moving average
To get the result of EMA, there are 3 basic steps you need to calculate such as:
• Calculate the Simple Moving Average or SMA • Calculate its multiplier for weighting or smoothing factor to the previous EMA • Calculate the recent or current EMA
To calculate and get the Exponential Moving Average or EMA, you should compute and calculate the Simple Moving Average over the certain periods of time. Getting the result of SMA is not difficult at all and you just need to sum of the closing prices of the stock for the time period in question; and the result will be divided with the same number of time period.
A trader of Forex can create the simple strategy for trading to take the advantage and also create the opportunities using the few associated indictors or Moving Average. MA is always used as the technical indicator in trading Forex especially for certain periods such as 10, 50, 100 even 200 periods. When you want to be successful in Forex, you need the best Moving Average crossover strategy Forex to help you in making the right moves and decisions.
What is The Best Moving Averag Crossover Strategy Forex You can Use?
Moving Average is used as the trend indicator in Forex trading but it is also used to identify the levels of support and resistance. There are 2 common Moving Averages such as Simple Moving Average or SMA and EMA or Exponential Moving Average. SMA is the average prize of the time period while EMA will give more weight to the recent prices. When you want to be successful in Forex trading, you should understand them all and you need to have the best moving average crossover strategy Forex.
You need to have the strategy that uses EMA since it is the average type designed to give the response faster for the price changes. When you want to use those strategies, you need to know the steps and here are some answers such as:
• You can plot 3 EMA in the forms of 5-period EMA, 20-period EMA and also 50-period EMA on the chart for 15 minutes. • You can also buy when 5-period EMA will cross from the bottom to the top of 20-period EMA and the price from 5 and 20-period EMA are all over 50 EMA. • To sell the trade, you can sell when 5-period EMA crosses from the top to the bottom of 20-period EMA and both of the EMAs and their price are below 50-period EMA. • You may also place the initial order with the stop and loss method below 20-period EMA for buying the trade or around 10 pips of the entry price. • The optional step is moving the stop-loss method to break even when you know the trade is profitable with 10 pips.
You may consider placing the profit target about 20 pops or you can exit when 5-period falls under the 20-period when long or when 5 moves above 20 if short and it might be the best moving average crossover strategy Forex you can use and you may combine with other strategies.
Forex trading is not for beginners because mostly, beginners will make mistake. However, there is no professional without beginner so you can try this activity with proper rules and steps. What you need to do is identifying the movement of the price so you know whether it is strong or not using the momentum moving average crossover as the indicator line. When you want to use the formula of the indicator, you need to compare the recent closing price with the previous one.
Know The Formula of Momentum Moving Average Crossover
Mostly, the momentum indicator will be displayed on the single line between several section of the chart than the bars or price line. Perhaps, you might think that momentum moving average crossover is difficult to calculate but actually it is so easy to count. There are several different versions of momentum formula but no matter what you choose, the momentum will be the comparison between the previous closing price and current closing price. In the formula, Momentum will be represented by (M).
Meanwhile, the Current Closing Price will be represented by (CP) and the previous closing price will be represented by (CPn). You need to determine the “n” value. Here is the formula you can use such as:
M= CP – CPn or M= (CP/CPn) * 100
The first version of the formula will take the difference among 2 closing prices. Meanwhile, the second version of the formula will calculate the momentum as the change rate in price and it will be stated in the form of percentage. The indicator of momentum will identify when the price will move high or down and how strong the movement of the price is. When the momentum indicator is positive, the price will be above the “n” or previous closing price. When the momentum moving average crossover is negative, it will be below the value of “n”.
When the percentage is lower than 100, the price may be below “n”. When the amount is above or below 0 or 100, it will show you how far and how fast the price moves at that time.
Many people want to find the best strategy when they do Forex trading. There are many settings you need to know in order to get the best result and one of them is you need to learn about the most accurate Stochastic settings. What is Stochastic? It is also known as the Stochastic Oscilator which was developed in 1950s by George Lane. It is known to track the evolution of selling and buying pressure. Not many people use this tool because they don’t understand at all.
What to Know About The Most Accurate Stochastic Settings in Forex?
Many people don’t understand about the most accurate Stochastic settings but it can combine the holding periods and also the strategies. This is the easy fix but you need to learn so you will not be confused at all. Nowadays, people tend to use the Full Stochastic as the most accurate setting in Forex trading. This tool combines both Slot and Fast Stochastic into 3 different variables that will control previous periods and also the extend of the data smoothing. When you want to use this tool, you need to pick your effective variables.
You can do it by deciding how much noise you want to accept with the data. You need to understand anything you might choose and the more experience you get with the indicator may improve the reliable signals’ recognition. The traders who are considered as the short term players tend to pick low settings for all different variables because it may give them the best signals in the competitive market environment. Meanwhile, the long term players will choose the high settings for all variables since the high output will react to the major changes in the price action.
You need to find the most accurate Stochastic settings that will help you in trading Forex. What you need to know is Stochastic indicator is the momentum indicator that will show you how weak or strong the current trend right now is. It will help you in identifying ther market conditions related to the oversold and overbought within the trend.
Many people say Stochastic Oscillator as Stoch and you know that it is the trading momentum indicator that will follow the speed of the current trading momentum. Of course, this kind of indicator is used often to determine the oversold and overbought states in the Forex trading or Crypto trading. Not all people can use this tool and if you are professional, you can conduct the Stochastic Oscillator settings for 1 hour chart. Many people say that this is the killer move to be successful in trading.
What to Know Before Making Stochastic Oscillator Settings for 1 Hour Chart?
Before making Stochastic Oscillator settings for 1 hour chart, you need to understand about this tool so you know what to do and what to avoid. When it comes to the oscillator, the Stoch will fluctuate between zero and 100. If the value is under 20, then it is oversold. However, when the value is over 80, it is called overbought. The idea behind it is so simple to understand. This might work directly under the premise that will change in the momentum which precedes the price changes and also the trends.
You can take the analogy of the car. You need to imagine that you drive the car performing a U-Turn. Before U-Turn can take place, you need to slow down the car. You can imagine that U-turn is the trend reversal while slow down is the momentum change. The momentum change can be integrated to the trading strategy to know the reversal points in the market. Once you understand about it, you can implement this tool to the trading strategy you want and what you need to do is finding the divergences between stoch and price.
The divergence between them and other market indicator can signal the reversal trend imminent in the future. In summary, the Stochastic Oscillator settings for 1 hour chart will help you to find the hidden weakness and strength of the price action by identifying the oversold and overbought conditions in the market.
There are many best ways and methods to be successful in Forex trading and the advanced technology helps people to learn about it. One method you need to learn is the best Bollinger bands settings for scalping. The term “Bands” are lines that running below and above the SMA or Simple Moving Average of prices. Bollinger bands are created using the standard deviation instead of the fixed percentages and the settings use 20-period from hours, days or weeks and 2 deviations in standard versions.
How to Reduce Loss in Forex Trading Using Best Bollinger Bands Settings for Scalping
Meanwhile, the top band is created by adding the 2 deviations to MA or Moving Average and the bottom band is created by subtracting the 2 deviations from MA or Moving Average. The Bollinger Bands will give the people a perfect way to visualize the markets since the bands expand dynamically when the volatility of the market increases and contract when the volatility or market decreases. The most important thing in this method is you have to keep your losses small and you need to win the trade big.
You need to make sure that the winning average is bigger than losses. However, when you use Bollinger Bands settings for scalping, the trader may get away with the winning trades are on the same size as the losses due to the percentage of winning are done perfectly. If your stops in trading are 10 pips, then you can take 10 pips of winnings. During the US, Europe and UK session, the markets move so much in some currencies which finding the pip move around 10 to 60 minutes and it is not so difficult.
If you want to learn more about this method, you need to know math and the math lesson about the standard deviation is important. This is the statistical measurement of the data amount inside the normal bounds. The outer Bollinger bands are the measurement of the standard deviations. So, if the price hits the bands, the price is at the unusual extreme. By knowing the best Bollinger Bands settings for scalping, you can reduce your loss in Forex trading and you can get more winnings.
Scalping is one of favorite trading strategies in forex. The strategy is the choice among new and experienced traders as it is user-friendly. In addition, the risk is lower as the traders are making small pips but in high frequency. In scalping, time matters the most. Therefore, traders need the right Bollinger Bands settings for scalping. The trading strategy will work better when all the requirements and settings are met. Bollinger Bands Settings for Scalping: Requirements
Scalping strategy works based on a market environment, where the range is defined by flat or aligned Bollinger Bands. The preferred Bollinger bands settings for scalping include the following: Use of default 20-period Time frame is 5 minutes Trading sessions are EUR and US Currency pairs are EUR/USD and GBP/USD After meeting the requirements, traders can set the Bollinger Bands for trading by using scalping strategy.
Bollinger Bands Settings for Scalping Trading
Buy Position For buy position, the Bollinger bands must be in range trading, namely, almost flat. In this case, the price must be low (overbought), touching the lower band. Open BUY position. The stop loss is set at 10 pips, below the entry price. Then, make sure the trade is closed at the upper band. Sell Position Just like buy position, the Bollinger Bands must also be almost flat for sell position. To get the target profit, take a look at the price and make sure to open SELL position when the price is touching the upper band. Then, stop loss is set at 10 pips above the entry price. Finally, the trade is closed at lower band. As always noted, Bollinger Bands cannot work optimally as a stand-alone trading analytical tool. As the market environment is changing, other indicators are necessary to make sure the traders make informed trading decisions. This way, they can minimize the risk of loss.
In forex trading, traders have a number of tools that can help in the decision making process. Bollinger bands are among the most popular ones. Bollinger Bans forex strategy can help the traders optimize the profits by buying low and selling high. The forex indicator also helps the traders avoid unnecessary mistakes when trading. Bollinger Bands (BB) is an indicator used for at least two purposes, namely, to identify potential overbought areas or oversold areas and to determine market volatility. To do the analysis, traders need to pay close attention to the 3 lines, namely the upper band, the lower band, and the middle band (20-period Moving Average). Use of Bollinger Bands Forex Strategy in Trading
To determine price trend
To determine the price trends, traders need to see the price position relative to the 20-period Moving Average. When the price is close to the upper band, then it is considered “oversold” (expensive). Meanwhile, it is considered “overbought” (cheap) when the price is close to the lower band. When it comes to the Bollinger Bands forex strategy, traders mostly avoid buying currency pairs when it is oversold. Traders may take a position to sell, instead. On the other hand, buying decision may be necessary when it is overbought. To determine market volatility
Determining entry or exit points can be challenging when the market is volatile. Therefore, traders need to identify volatility of the market. In the Bollinger Bands indicator, highly volatile market is evident when the distance between the two bands (upper and lower bands) is larger. On the hand, market volatility is considered low when the distance between the two bands is narrower. Of course, the Bollinger Bands forex strategy will be effective when it is combined with other analytical tools. The Bollinger Band indicator is not decisive when used as a stand-alone analytical tool.
Stock market is usually associated with mess or unpredictability. Actually, some patterns are always created inside, and they are repetitive. Therefore, an American forex trading analyst, Ralph Nelson Elliott, invented a theory called Elliott Wave to help traders identify the patterns. Forex Elliott wave is used to analyze the price patterns for stocks, forex, and other securities. Fundamentals of Forex Elliott Wave Theory
According to Elliott, the market fluctuates in a wave pattern called 5-3 waves. They are classified into two phases: Phase I (5 waves) is called impulsive wave. The waves forms the main trends. When prices move to one direction during a certain period is an simple example of impulsive waves. The imbalanced market sentiments force the prices to move into a certain direction. In euphoric condition, the prices increase continuously. Meanwhile, in panic condition, the prices will decrease continuously. Phase II (3 waves) is called corrective wave. Imbalances during the impulsive phase will be followed by corrective wave, which leads to equilibrium. Elliott notes that the corrective waves usually consist of three phases. The principle of Forex Elliott Wave theory is any impulsive waves will reach an equilibrium spot. The faster the prices increase, the faster it will decrease. Likewise, the faster the prices decrease, the faster they will increase. The cycle repeats all the time even under very fluctuating conditions. Forex Elliott Wave Theory: Things to Note The Elliott Wave is helpful in predicting price movements. However, beginners often find it difficult to apply the Forex Elliott Wave. A number of reasons are behind it, including: Formulating the trading system can be challenging for newbie, particularly in determining the entry and exit rules for every phase in the Elliott waves. The trading signals can be subjective in terms of interpretation. Beginners mostly lack this ability; Elliott wave is not a stand-alone oscillator. It is best combined with additional oscillators, particularly to find out the entry and exit points. However, when the traders can determine the wave positions correctly, they can earn huge profits. Of course, it may take times and determination on the part of traders.
Trendline is one of the oldest technical analytical tools used by forex traders. With the development of trading platforms like MetaTrader, traders now have more options of forex trendline indicator. Simple trendline can be the most useful tool in studying the market trends. It is easy to draw, particularly when you use automatic trend line offered the trading platform. Forex Trendline Indicator: Auto Feature from MT4
A trendline is simply defined as a straight light that connects two price points or more. In forex trading, the trendline can act as a line that shows support or resistance. The resulting line is generally classified into two, namely, up trend and down trend. The trendline can be used for any chart or indicators and for any time period. Drawing a trendline may not be as easy at it sounds, particularly if the traders are not used to to it. Therefore, MetaTrader 4 offers “Auto Trendline” feature, which allows the traders to draw the trendline automatically as long as the requirements are met. Tips for Using Forex Trendline Indicator from MT4 Using forex trendline indicator can help the traders to focus on important aspects of market analysis. The auto feature from MT4 is a great tool for new traders and it can be used for any kinds of currency pairs in forex. The Auto Trendline offered by MT4 can help you in many ways, for instance: Following the trendline as displayed by the trendline indicator. You can use it to judge the trends Using trendline for stop-loss orders; Exploring your own trendline by using Auto Trendline. For instance, if your price is above or below the trendline, you can try a breakout strategy; The best way to explore the forex trendline indicator is adding it with other trading strategies, indicators, and analytical tools. These allow you to improve the trading outcomes as you can make educated decisions on buy or sell execution.