Forex EMA Trend Trading System Strategy with MACD and Range Factor

Advanced and high accuracy Forex EMA Trend Trading System – Exponential Moving Average reacts faster to recent price changes than a simple moving average. The 12- and 26-day EMAs are the most popular short-term averages, and they are used to create indicators like the moving average convergence divergence (MACD) and the percentage price oscillator (PPO). In general, the 56- and 200-day EMAs are used as signals of long-term trends.

 
Exponential Moving Average – EMA‘ A type of moving average that is similar to a simple moving average, except that more weight is given to the latest data. The exponential moving average is also known as “exponentially weighted moving average”.
 
More specifically, the exponential moving average (EMA) gives a higher weighting to recent prices than the simple moving average (SMA) does, while the SMA assigns equal weighting to all values. The two averages are similar because they are interpreted in the same manner and are both commonly used by technical traders to smooth out price fluctuations.
 
The most commonly used EMAs by forex traders are the 5, 10, 12, 20, 26, 50, 100, and 200. Traders operating off of shorter time frame charts, such as the five- or 15-minute charts, are more likely to use shorter-term EMAs, such as the 5 and 10.
 
Traders looking at higher time frames also tend to look at higher EMAs, such as the 20 and 50. The 50, 100 and 200 EMAs are considered especially significant for longer-term trend trading.

 

Forex EMA Trend Trading Rules

 

Trend following trading strategy is an investment strategy that tries to take advantage of long-term moves that seem to play out in various markets. The strategy aims to work on the market trend mechanism and take benefit from both sides of the market, enjoying the profits from the ups and downs of the finacial markets.

The main rules of Forex EMA Trend Trading with MACD and Range Factor – The main time frame we are going to watch is the 1-Hour time frame. After confirming the trend (Neo EMA Trend, EMA 26,  and EMA 20), we will look to 5-min chart for entering and exiting a position. You can also trade the 15-minute time frame with 5-minute chart to determine your entries.

 

Exponential Moving Average as Trend Indicator
55-EMA; using weighted moving average, we can identify the immediate trend faster than a Simple Moving Average. This is one of the important indicators in the FB system as it will tell us whether to enter long or enter short.
 
MACD Oscillator & Range Factor
FastEMA 12, SlowEMA 16 and SignalSMA 9 –  this oscillator will helps traders to identify market momentum and thus creates entry signals. Divergence is the most effective early sign that the movement is going to reverse. Range Factor will also helps trader to identify and thus creates entry signals.
 
Power Hours
These hours (0700 GMT – 1800 GMT) are especially volatile because it eclipses at least two major foreign exchange markets from the Asians to the Europeans then the Americans.
 
Trading Pairs
GBP/USD and EUR/JPY. Although it seems that most of the majors and crosses worked well, but I did not try with other pairs so please do a demo first because going live on other currency pairs.

 

BUY Rules
  • The closing price must be above the 55-EMA (Neo Blitz EMA Trend) on the hourly chart
  • 12-EMA line above 26-EMA
  • Both 12-EMA and 26-EMA above 55-EMA (Neo Blitz EMA Trend)
  • The closing hourly candlestick must be a bullish candlestick
  • MACD bar must show a positive divergence or show a higher low bar
  • Magenta Range Factor line upward and above 0 line
  • If all of the conditions above agree, switch to 5-min chart to open long position at the break of the previous hourly candle’s high; set stop loss recent swing low.

 

SELL Rules
  • The closing price must be below the 55-EMA (Neo Blitz EMA Trend) on the hourly chart
  • 12-EMA line below 26-EMA
  • Both 12-EMA and 26-EMA below 55-EMA (Neo Blitz EMA Trend)
  • The closing hourly candlestick must be a bearish candlestick
  • MACD bar must show a negative divergence or show a lower high bar
  • Magenta Range Factor line downward and below 0 line
  • If all of the conditions above agree, switch to 5-min chart to open short position at the break of the previous hourly candle’s low; set stop loss recent swing high.

 

NOTE:

Forex trading is a risky business, so try not to increase the amount of risk that you’re already taking. When you enter into trades less frequently, you’ll naturally choose those with a higher probability of winning, and NOT enter into trades with a lower probability of winning.
 
Remember, in Forex trading, it’s not about how many times you win, but how MUCH you win. Even if you only have one successful trade each month, it’s enough for you to be rich if you can be consistent about it.


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