4 EMA and Channel Forex Trend Following Strategy


4 EMA and Channel Trading Strategy

Channels and EMAs can be a good trading basis to catch trading signals. This system is use on a 4 hour or daily timeframe. You can use all currency pairs in this system. We can define long and short entries by referring to this system.

Here are the setups:

  • Calculate the 4-, 12-, and 23-bar exponential moving averages (EMAs) of the currency’s closing prices.
  • Calculate a 50-bar EMA of the bond closes.
  • Calculate a 10-bar EMA of highs and a 10-bar EMA of lows.

Rules for long position:

  • Look at the 4 bar EMA, it must be greater than the previous bar.
  • 12-bar EMA must be above 23-bar EMA, for the 50-bar EMA and close price above the EMA 10 of highs .

Rules for short position:

  • Observe the 4 bar EMA, it must be less than the previous bar.
  • The 12-bar EMA must be below the 23-bar EMA,
  • For the 50-bar EMA and close price below the EMA 10 Low.

Exit Position: 

Set a money management to exit position or use trail stops.
We can use the 12-bar EMA to exit position, it must be below the 23-bar EMA; we’ll exit our short position when the 12-bar EMA crosses above the 23-bar EMA.

Set stop loss when the price touches EMA 50.
You can take profit at 60 pips for EU, 70 pips for GU at a 4 hour timeframe.
Take 200 pips for EU and 250 pips for GU in a daily timeframe.

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