Article by Investazor.com
For a new trader basic strategies that apply the principles of fast moving averages are easy to understand.
The following system is applicable on all major pairs, with a time frame set on 1 hour (H1) or 15 minutes (M15), for indicators we will use the 10, 25 and 50 Exponential Moving Average (EMA).
When to enter the trade ?
At the point when the short term EMA (10) follows the path through the EMA (50), enter a buy or sell order in the exact direction of the EMA (10) after passing the EMA (50)
TIP: In order to not get tricked by fake signals, it’s better to wait for the current candlestick to close in the adverse direction of the EMA (15).
When to close the trade ?
This forex strategy presents 2 options: close when EMA (10) make a reverse and intersects EMA (25) or when it returns and reaches EMA (50).
It’s recommended to use this technique when market is in a trending period or on massive price break-out / movement. The only downside is the fact that this type of indicator (Fast Moving Average) it’s the type of indicator that laggs, meaning that it shows current market situations not future ones. This situation is not so good, since signals can return fake situations and the trader need to monitor the market at any time (keep in mind to avoid this system when the market is not in a trend move but rather in a sideway moment).
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