To profit in trading, traders must have a winning edge. You would often hear traders talk about having a trader’s edge, but what is it about?
Trading edge is about having a statistical advantage that would allow a trader to profit in the long run.
It could be that a trader trades on high yield trade setups. These are traders who would gain more every time they win and lose a little whenever they hit a loss. This means that even if they have an even number of wins and losses, they would still come out profitable because of their high yield wins.
On the other hand, there are traders whose edge is based on high probability trading. These are traders who would prefer to be accurate rather than aiming for a home run high yield trade. These traders aim to win more often than they would lose. Many of these traders just have about an equal profit to loss ratio. However, because they are booking more wins than losses, they would also come out profitable in the long run.
Trading edge could come from different sources. It could be that a trader is using indicators that could help them produce high yield or high probability trades. It could also be that because of the trader’s technical analysis skills, he would win more often than he would lose. It could also come from a systematic trading strategy that would produce more wins than losses or gain more whenever a win is booked compared to the losses.
EMA Signals Forex Trading Strategy is a systematic strategy that has a good combination of high probability trades and trade setups that would ensure that yields are twice as big as the losses.
Exponential Moving Averages Signals
Exponential Moving Averages Signals is a trading indicator that produces trade signals based on momentum reversals.
As the name indicates, the trade signals produced by this indicator is based on the Exponential Moving Average (EMA).
Exponential Moving Averages are moving averages that are more responsive to price movements compared to the standard Simple Moving Average. It is characterized by moving averages that follows price a bit more closely. Because of this, EMAs are great for trade signals.
Exponential Moving Average Signals makes use of two short-term EMAs. Trade signals are produced whenever the two moving averages crossover. This creates trade signals that are very responsive to price movements.
Trade signals are indicated by arrows pointing the direction of the short-term trend reversal.
EMA Angle Zero
EMA Angle Zero is an oscillating indicator which is also based on the Exponential Moving Average (EMA).
This indicator makes use of a mid-term Exponential Moving Average to identify trend direction. It then duplicates the EMA and shifts either of the two moving averages either to the left or to the right. The trend is then derived from the difference of the two moving average lines.
The indicator displays its readings as histogram bars. Positive bars indicate a bullish trend while negative bars indicate a bearish trend. Bullish bars are colored lime green while bearish bars are colored yellow. Non-trending bars on the other hand are colored fire brick.
Trading Strategy
This trading strategy makes use of the two indicators mentioned above to identify trade entries that are in confluence with the trend.
The EMA Angle Zero indicator will serve as the main trend indicator. Trades are filtered based on the direction of the EMA Angle Zero trend. Traders should also visually observe if they could see a trending market in the direction indicated by the EMA Angle Zero or not.
The Exponential Moving Averages Signals indicator will serve as the trade entry trigger. Trades are taken whenever a signal is generated that agrees with the direction of the trend on EMA Angle Zero. Traders should also observe price action and candlestick patterns. Trades that indicate a probable trend reversal based on price action and candlestick patterns tend to work better.
Indicators:
- EMAAngleZero (default setting)
- ExponentialMovingAveragesSignals (default setting)
- Fractals
Preferred Time Frame: 1-hour and 4-hour charts
Currency Pairs: major and minor pairs
Trading Session: Tokyo, London and New York sessions
Buy Trade Setup
Entry
- The EMA Angle Zero indicator should print lime green bars.
- Price action should indicate a bullish trend characterized by rising swing highs and swing lows.
- The Exponential Moving Averages Signals indicator should produce a buy trade signal indicated by an arrow pointing up.
- Enter a buy order on the confirmation of the conditions above.
Stop Loss
- Set the stop loss on the fractal below the entry candle.
Take Profit
- Set the take profit target at 2x the risk on the stop loss.
Sell Trade Setup
Entry
- The EMA Angle Zero indicator should print yellow bars.
- Price action should indicate a bearish trend characterized by falling swing highs and swing lows.
- The Exponential Moving Averages Signals indicator should produce a sell trade signal indicated by an arrow pointing down.
- Enter a sell order on the confirmation of the conditions above.
Stop Loss
- Set the stop loss on the fractal above the entry candle.
Take Profit
- Set the take profit target at 2x the risk on the stop loss.
Conclusion
This trading strategy which combines a decent 2:1 reward-risk ratio and a relatively high win rate is a perfect blend of a high yield strategy and high probability trading. This allows traders to profit consistently from the market over the long run.
The variable that traders could adjust in this strategy would be the 2:1 reward-risk ratio. Aggressive traders could opt to aim for a higher reward-risk ratio, however it could also bring down the win rate. Traders could adjust this according to their risk appetite and according to how strong they see the market is moving. Manage your risk properly and you would come out profitable with this strategy.
Recommended MT4 Brokers
XM Broker
- Free $50 To Start Trading Instantly! (Withdraw-able Profit)
- Deposit Bonus up to $5,000
- Unlimited Loyalty Program
- Award Winning Forex Broker
- Additional Exclusive Bonuses Throughout The Year
>> Sign Up for XM Broker Account here <<
FBS Broker
- Trade 100 Bonus: Free $100 to kickstart your trading journey!
- 100% Deposit Bonus: Double your deposit up to $10,000 and trade with enhanced capital.
- Leverage up to 1:3000: Maximizing potential profits with one of the highest leverage options available.
- ‘Best Customer Service Broker Asia’ Award: Recognized excellence in customer support and service.
- Seasonal Promotions: Enjoy a variety of exclusive bonuses and promotional offers all year round.
>> Sign Up for FBS Broker Account here <<
Click here below to download: