EMA eWaves Forex Trading Strategy

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EMA eWaves Forex Trading Strategy

You would often hear of traders seeking for a trading edge, but what is it really about?

Different traders have different ideas about trading edge. Some believe it is a strategy, others believe it is an indicator, others think of it as a system, some think it is a money management technique, while others believe it is the psychology of a trader. I think all of these are partially right. In fact, all of this could contribute to having that elusive trading edge.

For me, trading edge is anything that would allow a trader to profit in the long run. Statistically it could show traders yielding more profits when they win compared the amount they are losing whenever they turn in a loss. This is what we call a positive reward-risk ratio. It could also show traders winning more often than they are losing in spite having a 1:1 reward-risk ratio. This is what we call high probability trading. It could also be a combination of both. Whatever the source of the trading edge be, as long as a trader profits in the long run, that is what matters. “You win some and lose some, as long as the outcome is the income.”

EMA eWaves Forex Trading Strategy is a high probability trading strategy that manages to provide a positive reward-risk ratio. This combination of having a high win rate and reward-risk ratio allows traders to earn exponential yields in the long-run.

eWaves Indicator

eWaves indicator is a unique technical indicator which allows traders to identify trend direction based on a complex mathematical basis. This indicator derives its computation from modified moving averages and Fibonacci ratios.

The eWaves indicator is displayed as an oscillator plotted as histogram bars. Its bars could oscillate from positive to negative or vice versa. Positive bars indicate a bullish trend direction, while negative bars indicate a bearish trend direction.

The bars also change colors depending on the strength of the trend. Lime green bars indicate a strengthening bullish trend, while dark green bars indicate a weakening bullish trend. Red bars indicate a strengthening bearish trend, while maroon bars indicate a weakening bearish trend. Orange bars on the other hand indicate the point of a probable trend reversal.

EMA Crossover Signal

EMA Crossover Signal is a custom technical indicator which could aid traders in determining exact entry points based on Exponential Moving Averages (EMA).

One of the most common techniques to identify excellent entry points is by using crossovers of moving average lines to identify trend reversals. However, some moving average lines are too lagging to provide a timely entry signal.

EMAs on the other hand are one of the most responsive types of moving average lines. Using this type of moving average line on a crossover entry provides a timelier entry signal which traders could use.

EMA Crossover Signal provides entry signals using the crossover of EMA lines. It plots arrows on the crossover points showing the direction of the trend reversal.

Trading Strategy

This strategy is a trend following strategy which uses a confluence of the eWaves indicator, a 50-period Simple Moving Average (SMA), and the EMA Crossover Signal indicator.

First, we identify if the market is trending or not and which direction it is heading. To do this, we will use a combination of the 50 SMA line and the eWaves indicator.

Using the 50 SMA line, the trend direction will be based on how the 50 SMA line is sloped and where price is in relation to the 50 SMA line.

Using the eWaves indicator, we will be basing trend direction on whether the histogram bars are positive or negative. An established trend would also have a longer duration of trending bars.

On top of these filters, traders also must visually identify if the market is trending based on the swing highs and swing lows.

If all the trend filters are fulfilled, we could then wait for a specific entry signal using the EMA Crossover Signal indicator.

Indicators:

  • 50 SMA (Gold)
  • EMA Crossover Signal
    • Faster EMA: 5
    • Slower EMA: 10
  • Ewaves (default setting)

Preferred Time Frames: 1-hour, 4-hour and daily charts

Currency Pairs: major and minor pairs

Trading Sessions: Tokyo, London and New York sessions

Buy Trade Setup

Entry

  • Price should be above the 50 SMA line.
  • The 50 SMA line should be sloping up.
  • The eWaves indicator should be printing positive bars.
  • Price action should be trending up.
  • Enter a buy order as soon as the EMA Crossover Signal indicator prints an arrow pointing up.

Stop Loss

  • Set the stop loss on the fractal below the entry candle.

Exit

  • Close the trade as soon as the EMA Crossover Signal indicator prints an arrow pointing down.

EMA eWaves Forex Trading Strategy

EMA eWaves Forex Trading Strategy 2

Sell Trade Setup

Entry

  • Price should be below the 50 SMA line.
  • The 50 SMA line should be sloping down.
  • The eWaves indicator should be printing negative bars.
  • Price action should be trending down.
  • Enter a sell order as soon as the EMA Crossover Signal indicator prints an arrow pointing down.

Stop Loss

  • Set the stop loss on the fractal above the entry candle.

Exit

  • Close the trade as soon as the EMA Crossover Signal indicator prints an arrow pointing up.

EMA eWaves Forex Trading Strategy 3

EMA eWaves Forex Trading Strategy 4

Conclusion

This strategy is a good example of a high probability strategy that has a positive reward-risk ratio. Not all trades would yield a high yield but if used in the right market condition, most trades would yield a profit.

This strategy uses the opposing trade signal for trade exits, however, it would also be very beneficial if a trader could read candlestick patterns as this would allow an earlier exit prior to the actual reversal.


Forex Trading Strategies Installation Instructions

EMA eWaves Forex Trading Strategy is a combination of Metatrader 4 (MT4) indicator(s) and template.

The essence of this forex strategy is to transform the accumulated history data and trading signals.

EMA eWaves Forex Trading Strategy provides an opportunity to detect various peculiarities and patterns in price dynamics which are invisible to the naked eye.

Based on this information, traders can assume further price movement and adjust this strategy accordingly.

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How to install EMA eWaves Forex Trading Strategy?

  • Download EMA eWaves Forex Trading Strategy.zip
  • *Copy mq4 and ex4 files to your Metatrader Directory / experts / indicators /
  • Copy tpl file (Template) to your Metatrader Directory / templates /
  • Start or restart your Metatrader Client
  • Select Chart and Timeframe where you want to test your forex strategy
  • Right click on your trading chart and hover on “Template”
  • Move right to select EMA eWaves Forex Trading Strategy
  • You will see EMA eWaves Forex Trading Strategy is available on your Chart

*Note: Not all forex strategies come with mq4/ex4 files. Some templates are already integrated with the MT4 Indicators from the MetaTrader Platform.

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