200 EMA Forex Swing Trading Strategy
The 200 EMA swing strategy is a comprehensive strategy suited for beginners. The 200 EMA or exponential moving average helps traders determines the trend. EMA 200-period is the most popular indicators that traders uses, that is why we are also going to use this indicator and period.
Downtrend and Uptrend:
Downtrend: The price is below 200 EMA.
Uptrend: The price is above 200 EMA.
How it works:
- Put first the 200 EMA in the chart and then check the trend. The trend in the daily timeframe is the main trend.
- Look at the trend on 4-hour if it has the same trend with the daily chart.
- Look at 1-hour and see if it has the same trend with 4-hour and daily chart.
- It is in the 1-hour chart that you make your entry decision.
- On the 1-hour chart, wait for the price to touch back to the 200 EMA and enter on the reversal. You can identify reversal through the reversal candlestick.
- If you are thinking of a sell position, place sell stop order 3-5 pips below the low of the reversal candlestick and set stop loss 10-15 pips above the high of the reversal candlestick.
- If you are thinking of a buy position, place buy stop order 3-5 pips above the high of the reversal candlestick and set stop loss 10-15 pips below the low of the reversal candlestick.
- Target profit is at the previous swing high or low on the 1-hour timeframe, or you can trail the stops by moving the stop loss if the market move in favor of your position.
Take note that the 3 timeframes must be in the same trend. If one of these timeframes has a different trend, then there must be no trade.
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