Indicators are the main instruments of trading. Armed with good strategies, these instruments can make your trading career. Now, of course, a lot of thought must go before choosing. One must think a lot before deciding a strategy for his trading. There are a plethora of options available. And while all of them seem to work well, it depends on your trading style. That is, you need to choose an indicator that suits your strategy. A very good start though can be a Forex EMA indicator.
Advantages over SMA:
EMA stands for exponential Moving Average. It is a very popular indicator for currency traders. And it has a distinct advantage over the SMA. SMA, of course, stands for Simple Moving Average. The advantage you have with EMA is that it is more reactive. That means that they react faster to price movements. As a result, you can make quick decisions about taking a trading position. Another advantage is that EMA is based on more recent data than the SMA. Therefore EMA provides a truer picture of a market than SMA does.
There are a lot of strategies that require you to use a bunch of indicators. So that means that there are indicators that work complementary to each other. But that’s not the case with EMA. EMA can work perfectly as a lone wolf. It is very reliable. And it does not need improvements from other indicators. Forex indicators EMA is very flexible too.
How traders use Forex EMA indicator:
A very common strategy exists for users of exponential moving average. That entails selecting a short term and long term EMA. Once that is done, you trade your positions according to the short term EMA with respect to long term one. That works for a lot of traders who are looking to make consistent pips.
There are some steps one needs to keep in mind if one has to trade with EMA.
• Entering positions are fairly simple with EMA. So what you do is first select a short term and then a long term EMA. Suppose they are a 12 period one a 26 period one. Now one has to wait. So as soon as the momentum shifts and goes in trend’s direction, it is time to enter the market.
• For exiting too one has to look at trends. So suppose the market is trending up. Now when it loses its momentum and goes back to 12 EMA, it’s time to exit.
• For placing stop losses, best thing is to look for swings. Whenever you see high or low swings, make sure you place your stop loss orders. So you see, trading is quite simple with Forex EMA indicator.
Forex EMA indicator is quite popular. And now you know why. The basic idea of simplicity out does any fancy technical indicator any day. So always make sure you choose the right indicator that makes your job easier. You don’t want instruments that seem technical but that aren’t simple.
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