The 20 ema is used by most institutions, banks, funds and big boys as part of their trading. Some use it with the cross of another MA or MAs as a system. Many Forex trading 20 ema strategy the little guys (us) use the 20 ema in some form or other in our trading. For consistency all charts posted on this website will display the 20 EMA in RED and the 50 EMA in BLUETo a certain extent, the use of the 20 ema becomes, like Fibonacci retracements, a self fulfilling prophecy.Our use of the 20 ema is not as a trigger in any shape of form, but as one of the tools to help us in our decision making process.
A:The exponential moving average (EMA) differs from a simple moving average (SMA) by more weight being given to the most recent data. A common forex trading strategy using EMAs is to select a shorter-term EMA and a longer-term EMA, and to trade based on the position of the short-term EMA in relation to the long-term EMA. Stop loss will be placed at the low of the bar.For shorts, do the reverse.Exit current position and reverse when the opposite trade signal appears.As with all trend following systems, this works best in a trending market and is not good for ranging or whipsaw periods.You can add ADX as an additional filter.
Enter trades only when ADX is above 25, for both Buys and Sells.Note that this strategy is only concerned with whether price has closed above or below the 2 EMAs. Some spend their whole life looking for it.