Overview Of The 5EMA And 8EMA Cross Over Swing Trading System
This is one of the very basic swing trading strategies that uses 5ema and 8ema indicators. The underlying principle of this system is that if the faster exponential moving average(5ema) crosses the slower exponential moving average(8ema) to the upside, its an
indication of an uptrend. If 5ema crosses 8ema to the downside, its an indication of a downtrend.
Timeframes: 4hrs, daily.
Indicators: 5ema & 8ema
Currency Pairs: Any
Long Entry Rules: Wait for 5ema to cross 8ema to the upside. Buy at the close of the candlestick that closes after the ema’s have crossed. Place your stop loss 5-10 pips below the low of that candlestick.
Short Entry Rules: When 5ema crosses 8ema to the downside, sell at the close of the candlestick. Place your stop loss 5-10 pips above the high of that candlestick.
Take Profit: You can use a couple of options for take profit
if you take trades based on the daily chart, exit on the 7th day. The 7th Day includes the entry candlestick day.
similarly if you take trades based off the 4hour timeframe, exit on the 7th candlestick after the entry. The 7th candlestick includes the entry candlestick.
or your profit should be set at least 3 times the risk on that trade
Trade Management :
How would you manage a profitable trade placed witht eh 5ema and 8ema cross over swing trading system? Well, here’s a couple of options you can use:
If trade moves in favour, and you want to lock in profits, the best option is to move stop loss and place behind the high(or low) of each subsequent candleticks that forms. That means for a short trade, move stop loss and place above the high the candletick that continues to make lower highs. For a long trade, move stop loss and below the low of each subsequent candletick that continues to make Higher Lows.
Or if on the daily timeframe, you may try to use a 50-80 pips trailing stop.
If on the 4hr timeframe, use 25-40 pips trailing stop.
Advantages of the 5EMA And 8EMA Cross Over Swing Trading System
easy to understand and implement.
in a strong trending market, there is potential to make a lot more profit when you ride out the trend with good trade management.
Disadvantages of the 5EMA And 8EMA Cross Over Swing Trading System
This trading strategy would give a lot more false signals in a ranging market.
stop loss are quite big depending on the timeframe that is used so you need to adjust your position sizes to bring your trading risk to an acceptable level.
Moving averages are lagging indicators and therefore every entry taken based on this swing trading system is effectively “late”. Which simply means that price had already made a big move and you would have not gotten into the trade at the start of that move because the entry of the 5ema & 8ema trading system is based on lagging moving average indicators.
Therefore by the time the forex trading system gives the signal to enter, the market may be due for a temporary reversal.
Source By:Swing Trading Strategies
The 10 and 20 SMA with 200 SMA Forex Swing Trading System Is A Very Simple Swing Trading System You Can Implement Without
Any Difficulty At All.
But First Lets Talk about Moving Averages…
WHY MOVING AVERAGES ARE USEFUL
There are two main reasons why moving averages are useful in forex trading:
moving averages help traders define trend
recognize changes in trend.
If you see any forex trading strategies that have moving averages in them, the use of moving averages would be pretty much related to the two reasons given.
I don’t want to bother with too many details about moving averages here…so moving on.
THE TWO SIMPLE MOVING AVERAGES(SMA):10&20 SMA’s
With this swing trading strategy, when the faster SMA, 10, crosses the slower SMA 20, it often signals a trend change.
So when you see 10 SMA cross 20 SMA to the upside then you know there is a great possibility that the market is in an uptrend.
If 10 SMA crosses 20 SMA to the downside, then you know there is a great likelihood that the market is in a downtrend.
The 10 and 20 SMA with 200 SMA Forex Swing Trading System Trading Rules
Trading Timeframes: Stick to 4hr timeframe and the daily Timeframe.
After the faster 10 SMA crosses the slower SMA 20 look for these reversal candlesticks to enter your trade
For Selling, look for bearish reversal candlesticks and place sell stop order 5 pips under the low of that bearish reversal candlestick for buying, look for bullish reversal candlesticks and place your buy stop or buy stop order 5 pips above the high of that bullish reversal candlestick.
Place your stop loss above 5 pips above the high of the entry reversal candlestick if you are selling and 5 pips below the low of the bullish reversal candlestick if you are buying.
Set your take profits to 3 times what your risked or look for previous swing high/lows and use these price levels as your take profit target.
How To Use 200 SMA With This Forex Strategy
Now as an added measure to ensure you only trade with the main trend, the 200 SMA can be used a further filter.
if 10 and 20 sma are above the 200 SMA only take long positions.
if 10 and 20 sma are below the 200 SMA only take short positions.
This ensures you take trades only based on the significant or main trend which 200 SMA gives you an indication of.
Source By:Swing Trading Strategies
The 20SMA with RSI swing trading system
The 20SMA with RSI swing trading system is a very easy forex swing trading system which new forex traders can find very easy to apply and follow.
The 20SMA with RSI swing trading system in a nice trending market can bag you hundreds of pips very easily, especially if traded on
the 4hr or daily timeframes.
Ok,the 20SMA for identifying and whether the trend is up or down and here’s how:
when the price is above the 20sma, the market is in an uptrend.
when the price is below the 20sma, the market is in a downtrend
What about the RSI?
The RSI settings should be set to 5 days RSI. What you need is to put in the 50RSI Level on your chart as well.
The purpose of the RSI in this trading strategy is to confirm the strength of the trend:
when the RSI peaks above the 50 level and starts to turn down, it indicates that the uptrend (or minor rally) is weakening and it is a good time to be looking to go short (or sell, if you don’t know what short means)
the opposite is also true…when the RSI bottoms below the 50 level and starts to head up, it indicates that the downtrend(or minor pullback) may be weakening and it may be a good time to look for a trade entry signal to go long (long=buy, ok?)
THE TRADING RULES OF THE 20SMA WITH RSI SWING TRADING SYSTEM
Look at the chart below to understand the trade entry rules of the 20SMA with RSI Swing Trading System
When To Sell:
Price has to be below the 20SMA-indicating a downtrend.
Wait for price to rally back up to touch the 20SMA line.
Once 20SMA line is touched, look down to see if the 5day RSI has peaked above 50level and has started to turn down-confirming a weakening upward momentum.
Place a sell stop order under the low of the candlestick (after it closes). This candlestick should coincide with the RSI starting to turn down.
Place Your stop loss above the high of that candlestick.
Your profit target: 3 times what you risked. Another option would be to exit with whatever profit you have when the opposite trading signal is given (which is when a buy signal is given-this can bag you hundreds of pips easily in a nice trending market).
When To Buy:
The rules to enter long( or buy) are similar to the sell rules but the exact opposite.
Price has to be above the 20SMA-indicating an uptrend.
Wait for price to pullback down to touch the 20SMA line.
Once 20SMA line is touched, look down to see if the 5day RSI has bottomed below 50RSI level and has started to turn up-confirming a weakening downward momentum.
Place a buy stop order above the high of the candlestick (after it closes). This candlestick should coincide with the RSI starting to turn up.
Place Your stop loss below the high of that candlestick.
Your profit target: 3 times what you risked. Another option would be to exit with whatever profit you have when the opposite trading signal is given (which is when a sell signal is given).
THE ADVANTAGES OF THE 20SMA WITH RSI SWING TRADING SYSTEM
simple trading system, easy to understand and implement.
in a good trending market, this will be a very profitable trading system.
stop loss distances are quite small, thus minimizing your risks
this trading system has a great risk to reward ratio as well.
THE DISADVANTAGES OF THE 20SMA WITH RSI SWING TRADING SYSTEM
as with all forex trading strategies based on moving averages, this system performs really poorly in no-trending markets.
sometimes price may not rally or pullback to touch the 20SMA line until very later on and by that time that price movement would have been already exhausted and the market may be looking to reverse direction.
moving averages indicators are lagging indicators-you are waiting for price to come back to a 20SMA when price may have already made a big move.
HOW TO IMPROVE YOUR TRADE ENTRY TECHNIQUE
Here is one really effective way to improve your trade entry technique.
Buy using reversal candlestick patterns that form when the price touches the 20SMA line. Look for reversal candlesticks like:
Dark Cloud Cover
Evening Star Doji
Source By:Swing Trading Strategies