Beginner Friendly Exponential Moving Average Strategy
If you are a newbie who is just getting into the world of forex trading, then one of the most important things that you need to do is to master some good trading strategies. Now, with that being said, there are tons of trading strategies out there, but a good deal of them are not ideal for newbies, because they are just too hard to master. However, what we’re here to do today is to take a look at one specific trading strategy, the 3 exponential moving average trading strategy, that is ideal for beginners.
moreover, this is a three exponential moving average trading strategy that is designed for scalping in forex trading period now, if you don’t know what an exponential moving averages, and if you don’t know what forex scalping is, no worries because we will explain both of these concepts before we get into talking about the main point of today’s article, which is of course this beginner friendly three exponential moving average trading strategy. Let’s get to it and teach you exactly how to make quick profits using this super beginner friendly three exponential moving average forex scalping trading strategy.
What’s an Exponential Moving Average?
Before we can get to talking about Andy’s three exponential moving average trading strategy for forex scalping, you first need to know what an exponential moving average, or an EMA is. First off, we have the normal moving average or simple moving average, which is a technical analysis tool that is used in many different types of trading, and a moving average is calculated to in order to identify the direction of a trend of a specific security.
When it comes to a simple moving average, all of the closing prices of the security are added together and then divided by the number of closing prices that were added together. Or in other words if you added together 10 different closing prices from 10 days, you would then divide by ten.
This then provides you with a simple average of the closing prices from a specific period of time. When it comes to the exponential moving average or the EMA, this place is a lot more weight on the most recent places that were used in the equation, and is therefore much more responsive, and therefore provides you with much better signals for short term trading. This is why Andrew uses the exponential moving average for this short term 5 minute forex scalping trading strategy.
What’s Scalping in Forex?
Before we can get to talking about this three exponential moving average strategy for forex scalping, you do of course also need to know what scalping trading is. Now, scalping is a very specific type of day trading or intraday trading, and it is characterized by trays only being open for a very short period of time, always less than a full day.
In terms of forex scalping, this is a strategy type that usually move trades only being open for a maximum or 15 minutes, and as is the case with Andrews three exponential moving average trading strategy, the time frame he uses a 5 minute time frame.
The point of scalping in forex trading is for trades to only have minimal investments and to only be open for a minimal amount of time, thus providing you with a whole lot of small profits that add up to something substantial over the course of a full day. The main goal of this type of trading is to have a minimal amount of risk while trading, while also producing a high number of profiting trades per day.
The Best Five Minute Three Exponential Moving Average Forex Strategy
OK, so now that you know what exponential moving averages are, as well as what scalping in forex trading is, we can now get to teaching you exactly how to put this three exponential moving average forex scalping trading strategy to use. Remember, this video comes as courtesy of Andrew A, a highly respected trader who knows exactly what he’s doing, so if you want to make the most out of the strategy, we definitely recommend watching the included video.
- In order to use this three exponential moving average trading strategy you first need to open up your chart on your trading platform, and keep in mind that this strategy is designed to be used with a 5 minute time frame, so open up a chart with a 5 minute time frame.
- In order to use this particular trading strategy, you then need to add three separate exponential moving average lines to your chart. Go to the indicators section on your trading platform and just add three EMA lines to your chart.
- you will now need to alter the settings on those exponential moving average lines, so change the first one to an input of 21, the second to an input of mind, and the third to an input of 13, with the close of all three lines being set to 0.
- With your chart set up, what you’re looking for here are candle sticks that don’t touch the exponential moving average lines or about 40 minutes. When the candle sticks are not touching any of the three lines you need to wait for it the first candle stick to touch any of the EMA lines. When a candle stick does touch one of the three exponential moving average lines count backwards by 5 candle sticks, and out of those five candle sticks, look for the highest handle or the lowest handle.
- This then provides you with an entry into the trade, which as you can see from the example radio, is a by trade. When there is an upward trend, then you are looking for the highest point in those five candles, and this is going to be your entry into a buy trade, and vice versa when it comes to sell trades.
- The only thing left to do is to exit the trade, which is done when your buy trade hits a resistance level or when you sell trade hits a support level.
The Best Beginner 3 Exponential Moving Average Trading Strategy – The Bottom Line
The bottom line here is that if you are a beginner forex trader who wants to make quick and easy money, then this particular 3 exponential moving average forex trading strategy is something that you definitely want to master.
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