EMA-MOMENTUM Forex & Stock Trading Strategy

Using the EMA and Momentum indicators together with the right settings makes analyzing the market easier and helps you find the best trading signals earlier. This means you can enter the market with minimal risk and great profit potential. Over time, this strategy increases your chances of long-term success.

 

So, by the end of this tutorial, you’ll know exactly when to enter trades with high probability, without second-guessing yourself, because you’ll consistently find high-accuracy trading signals with low risk and high rewards.

The Momentum indicator is a tool used by traders to gain a better understanding of the speed or rate of change of a security’s price.

It’s best used alongside other indicators and tools because its primary function is to measure the speed and strength of trends. Therefore, the Momentum indicator shows the strength of price movements over time regardless of whether prices are going up or down.

Since the main purpose of the Momentum indicator is to show the relative strength of price movements while disregarding the direction, it’s most effective when combined with other technical indicators such as trendlines and moving averages, which indicate trends and price directions.

That’s why traders can easily succeed in forex, stocks, or cryptocurrencies when they know the right settings and combinations with trend indicators like Moving Average.

And in this tutorial, we’ll uncover the secrets of the best settings and combinations of the Momentum and Moving Average indicators.

The Momentum indicator is a powerful and easy-to-read tool.

The simple rule for reading the Momentum indicator in our current strategy is this:

• if the momentum line rises above 100 from below, it’s a BUY signal.
• Conversely, if the momentum line falls below 100 from above, it’s a SELL signal.

Again, this is the basic rule to follow in this strategy. It’s straightforward and manageable even for beginner traders. Despite its simplicity, the signals generated by this Momentum indicator are highly accurate.

Furthermore,

• When the momentum line rises above 100, signaling a BUY, as long as it stays above this level, the market is considered in a bullish phase.
• Conversely, if the momentum line crosses below 100, signaling a SELL, and remains below it, the market is in bearish territory.

These are crucial rules we’ll use to find the best trading signals with high accuracy and minimal stop-loss risk compared to the significant profit potential.

Next, we’ll determine the market trend direction using the Exponential Moving Average or EMA line.

Moving Average is a technical indicator used by market analysts and investors to determine the direction of a trend. It summarizes financial data points over a specific period and divides the total by the number of data points to get an average. It’s called “moving” because it continually recalculates based on the latest price data.

34-period EMA and 10-period EMA.

The goal of this strategy is to identify short-term market trends using Moving Average analysis, but the moving average line should not be too reactive to small market movements.

The collaboration between the 34-period EMA and 10-period EMA aims to provide adequate retracement room because we enter the market when the short-term trend is clearly established, eliminating the need to guess where the trend is currently heading.

When the market pulls back and the price moves between the 34-period EMA and the 10-period EMA lines, traders should consider entering the market when the price continues in the original trend direction.

• Download “ForexWOT-HeikinAshiTrendCCI” (Zip/RAR File).
• Copy mq4 and ex4 files to your Metatrader Directory …/experts/indicators/
• Copy the “ForexWOT-EMAmomentumSystem.tpl” file (template) to your Metatrader Directory …/templates /
• Start or restart your Metatrader Client.
• Select Chart and Timeframe where you want to test your forex system.
• Right-click on your trading chart and hover on “Template”.
• Move right to select “ForexWOT-EMAmomentumSystem” trading system and strategy.
• You will see the “ForexWOT-EMAmomentumSystem” is available on your Chart.

While these analysis rules may seem straightforward, it’s crucial not to overlook any of them as it could undermine the accuracy of this strategy.

• The first rule is to identify a clear trend. As I explained earlier in the video, clear signs of a bullish trend include the 10-period EMA above the 34-period EMA with both EMAs sloping upwards. As you can see on this chart, both bullish criteria are met, confirming that the market is in a bullish condition.
• Secondly, the 34-period MOMENTUM line is above the 100 level. This indicates strong market strength for maintaining the bullish trend based on momentum analysis.
• Thirdly, the 10-period MOMENTUM line dips below the 100 level while the 34-period MOMENTUM line remains above it.
• Fourthly, the 10-period EMA stays above the 34-period EMA when prices correct into the zone between these two lines.
• Fifthly, open a BUY position on the next candle if the 10-period MOMENTUM line rises above the 100 level.
• Sixthly, place a stop loss below the nearest swing low. However, if the distance between the BUY entry and the nearest swing low is too close, consider placing the stop loss below the 35-period EMA line.

As you can see, with the power of the MOMENTUM indicator, this strategy provides high accuracy signals with very small stop loss risks. Of course, the effectiveness of this strategy guarantees long-term profitability.

The key is to maintain discipline with the trading rules established in this strategy. Next, I’ll provide an example of a SELL position to ensure you fully understand this powerful strategy and can implement it easily.

Once again, my message is clear: you must adhere to every rule outlined to maintain the accuracy of this strategy.

• The first rule is to identify a clear trend. As I explained earlier in the video, clear signs of a bearish trend include the 10-period EMA below the 34-period EMA with both EMAs sloping downwards. As you can see on this chart, both bearish criteria are met, confirming that the market is currently in a bearish condition.
• Secondly, the 34-period MOMENTUM line is below the 100 level. This indicates significant market strength to sustain the bearish trend based on momentum analysis.
• Thirdly, the 10-period MOMENTUM line rises above the 100 level while the 34-period MOMENTUM line remains below it.
• Fourthly, the 10-period EMA stays below the 34-period EMA when prices rise into the zone between these two lines.
• Fifthly, open a SELL position on the next candle if the 10-period MOMENTUM line drops below the 100 level.
• Sixthly, place a stop loss above the nearest swing high. However, if the distance between the SELL entry and the nearest swing high is too close, consider placing the stop loss above the 35-period EMA line.

This strategy has shown its strength in delivering highly accurate signals while keeping stop losses minimal. It’s versatile across all trading platforms due to its use of well-established indicators.

---

By using the right combination, as shown in this tutorial, our MACD trading accuracy increases significantly, while also helping beginner traders avoid the complexity often faced in market analysis.

---

So, I’m here to reveal everything about the Money Flow Index and the best Moving Average setups that you probably never knew. We will thoroughly examine the Money Flow Index, determine the best Moving Average settings when combined with the Money Flow Index, read candlestick charts, identify the best support and resistance levels, recognize trends, and execute entry patterns correctly.

• Download “ForexWOT-EMAMFI(Price-Action)” (Zip/RAR File).
• Copy mq4 and ex4 files to your Metatrader Directory …/experts/indicators/
• Copy the “ForexWOT-EMAMFI(Price-Action).tpl” file (template) to your Metatrader Directory …/templates /
• Start or restart your Metatrader Client.
• Select Chart and Timeframe where you want to test your forex system.
• Right-click on your trading chart and hover on “Template”.
• Move right to select “ForexWOT-EMAMFI(Price-Action)” trading system and strategy.
• You will see the “ForexWOT-EMAMFI(Price-Action)” is available on your Chart.