Trading with EMAs: Your go-to strategy

Want a simple tool that’ll help you spot trends and trade smarter? Exponential moving averages (EMAs) do just that! They smooth out price movements, making it easier to spot the right trading opportunities.

In this step-by-step guide, we’ll show you how to use EMAs. Let’s get started 🔥

Step 1. Choose your trading instrument

Pick any instrument that’s clearly trending either upwards or downwards. This strategy works best when there’s a clear market direction, so avoid sideways movement (when the price doesn’t have a clear trend).

Step 2. Set your timeframe

Choose a short timeframe like H1 (1-hour). Shorter timeframes help you spot opportunities quickly and react in good time.

Step 3. Add the EMAs to your chart

1. Press then
2. Search for Moving Average Exponential and add it twice
3. For the second EMA, click on it and set the period to 21

Step 4. Wait for the EMA cross over

🟢 For a buy trade: Wait for the 9-period EMA to cross above the 21-period EMA

🔴 For a sell trade: Wait for the 9-period EMA to cross below the 21-period EMA

Step 5. Look for extra confirmation

🟢 For a buy trade: If the price bounces off support or can’t break it, it might be a good time to buy

🔴 For a sell trade: If the price bounces off resistance or can’t break it, it might be a good time to sell

Step 6. Stay informed with key news

Economic and geopolitical news can lead to big price moves. Keep an eye on:

• Interest rate decisions
• Nonfarm payrolls (NFP)
• GDP reports and CPI

Everyday news can also push prices up or down.

Step 7. Combine technical and fundamental analysis

When the EMAs and the broader market trend (from news or data) align, it further informs your decision making:

🟢 Uptrend + Positive news = It might be a good time to buy

🔴 Downtrend + Negative news = It might be a time to sell

Step 8. Open your trade

🟢 Buy: After the crossover, make sure the price stays above both EMAs

🔴 Sell: After the crossover, make sure the price stays below both EMAs

Step 9. Set a stop loss and take profit

🟢 For buy trades: Set your stop loss just below the crossover point and your take profit near the next resistance level

🔴 For sell trades: Set your stop loss just above the crossover point and your take profit near the next support level

Pro tips for using the EMA strategy

• Combine with support and resistance. Use these levels to confirm entry points. If the price bounces off support for a buy or off resistance for a sell, it’s a strong signal
• Don’t rely on EMAs alone. Always confirm with other indicators to avoid false signals.
• Test before going live. Practice on a demo account first
• Factor in news. Stay updated on events that could shift the market’s direction

You’re ready to trade

🎉 Now you have a simple and powerful EMA strategy to get started with. Remember, every successful trader started as a beginner — keep practicing and refine your strategy as you go!