High Profitable Forex Strategy – The secret of EMA Momentum Trend Trading System is a breakout trend following strategy based on three filters: the first on the chart based on the moving averages, the second below the chart based on trend-momentum indicators, and momentum.
Momentum indicator – This is among the strongest and most reliable technical indicators available. The reason why is because the momentum indicator measures the strength and weakness of a trend. It is because of this that the momentum indicator provides great entry and exit signals for a current trend taking place. So, if you are a trend trader, this technical indicator is an absolute ‘must’.
Time frame: 15 min or higher.
Currency pairs: majors.
- Exponetial Moving Average 15 period, (shift 5)
- Exponetial Moving Average 220 period , (high, shift 5)
- Exponetial Moving Average 220 period, (low, shift 5)
- Exponetial Moving Average 20 period, (level +200 -200 close , shift 5)
- Trend direction
- Trend power
Trade the trend direction only:
Trend up above the 220 channel (red lines);
Trend down below 220 channel.
- If the price closes above the 200 level (black dot line) you take a market order if is confirmed by trend direction blue bar and trend power blue bar.
- Momentum line upward and > 100
- If the price closes below the -200 level (black dot line) you take a market order if is confirmed by trend direction red bar and trend power red bar.
- Momentum line downward and < 100
- Make profit with ratio 1.2 stop loss or trailing stop.
- Place intial stop loss 10 pips above/below orange line.
This is among the strongest and most reliable technical indicators available. The reason why is because the momentum indicator measures the strength and weakness of a trend. It is because of this that the momentum indicator provides great entry and exit signals for a current trend taking place. So, if you are a trend trader, this technical indicator is an absolute ‘must’.
The way in which it provides such good signals is by measuring the rate of change in closing prices. Then, it uses that data and displays it in a line format that is viewable in the indicator window.
It is very important that you understand that this is a ‘leading’ indicator. This means that it works slightly ahead of price. It is because of this ‘leading’ element that we are able to recognise trend strength and weakness.
In other words, we are able to receive a positive reading before the trend actually begins and this is why the momentum indicator is a great ‘predictor’ of trend creation. All this is discussed below and explained in the video tutorial.
You must also understand that the lower the time frame, the choppier this indicator is. So, if you are a low time frame trader you may find it more difficult to use. If you trade higher time frames then you should not have a problem. That does not mean you cannot trade it in lower time frames; you simply need to be more alert.
The first thing you must do is draw a line at the centre point of the indicator window. The centre line value is 100, although some Forex brokers use the value of 0. Do not worry if the value is different; the actual placement of the line is exactly the same; so to avoid confusion we are going to refer to the line as the centre point rather than a value.
When the momentum indicator reading is above the centre line, prices are usually trending upwards. When the reading is below it, prices are usually falling. When this occurs, we have a good entry signal into the relevant trend direction.
The only thing you must not do is trade in opposite direction. For example, do not place a ‘buy’ if the momentum reading is below the line and vice versa. Only trade when the trend is going in the correct direction relative to the placement of the indicator line i.e. trend up equals a momentum reading above the centre line and vice versa.
Our chart shows a down-trend when indicator is below the centre line and an up-trend when the indicator is above the centre line.