5 ema forex strategy

A 5 EMA (Exponential Moving Average) forex strategy can be defined as a weighted moving average that produces a greater weight, importance and current price information than a simple moving average. The 5 EMA (Exponential Moving Average) forex strategy is known to have a quick response to recent price changes than the simple moving average.

A 5 EMA (Exponential Moving Average) forex strategy has the capacity to solve most of the drawback which are seen in a simple moving average. A simple moving average is a system that comprises of buying and selling of currency pairs or assets primarily based on circumstances surrounding whether the short term moving average is seen to cross overhead or below the long term moving average meaning this system can be of no use to a day and swing forex trader.

USES OF 5 EMA (EXPONENTIAL MOVING AVERAGE) FOREX STRATEGY

A 5 EMA (Exponential Moving Average) forex strategy is frequently used in combination with other forms of trading indicators to identify significant market movements and fluctuations by gauging their validity. This trading system is most used by forex traders who trade intraday and in rapid moving forex markets.

5 EMA (Exponential Moving Average) forex strategy are also used by traders in the identification of a trading bias. For instance, if a strong upward market trend is indicated by a chart on the 5 EMA (Exponential Moving Average), an intraday forex trader can trade forex from the long side of an intraday chart.

A 5 EMA (Exponential Moving Average) forex strategy is very useful in the identification of trends with a small lag which occurs in simple moving averages. 5 EMA (Exponential Moving Average) forex strategy has the capacity to give more weight to a recent price by answering quickly to variations in price action and this automatically stops and solves the concern of lag produced when SMA gives no special predilection to latest market price creating an inability to know the current happenings in the forex market.

ADVANTAGES OF 5 EMA (EXPONENTIAL MOVING AVERAGE) FOREX STRATEGY     

A 5 EMA (Exponential Moving Average) forex strategy has the capability to portray the prevailing trend perfectly.

5 EMA (Exponential Moving Average) forex strategy helps a forex trader to journey into a market trend without any form of predicaments.

The 5 EMA (Exponential Moving Average) forex strategy is a very simple trading system to follow.

DISADVANTAGES OF 5 EMA (EXPONENTIAL MOVING AVERAGE) FOREX STRATEGY 

When using a 5 EMA (Exponential Moving Average) forex strategy for trading, lots of practical patience is needed in other to enter a trade.

In conclusion, the use of a 5 EMA (Exponential Moving Average) forex strategy guarantees that a forex trade is engaged only after there is a clear authentication of the trend. As seen in other forex trading strategies, the 5 EMA (Exponential Moving Average) forex strategy have drawbacks as well therefore, forex traders need persistent practice in other to sieve out the signals given by the crossover of the EMAs.

The content of this article reflects the author’s opinion and does not necessarily reflect the official position of LiteForex. The material published on this page is provided for informational purposes only and should not be considered as the provision of investment advice for the purposes of Directive 2004/39/EC.

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