In this video I will be sharing a super simple 3 ema trading strategy that works.
Topics covered :-
– What is ema
– How to use moving average
– 3 ema trading strategy
In this video, I will be sharing one of the simplest and easiest trading strategy using only 3 EMAs.
The strategy that I will share today is a trend following strategy. Therefore, we will buy when the price is in an uptrend, and we will look for selling opportunities in a downtrend.
Fundamentally, we will be looking to enter the trends on pullbacks. To achieve this objective, we will use 3 exponential moving averages.
A moving average is a simple indicator that plots the average price of an asset over a particular period of time. A simple 10 period moving average will show us the average price over the last 10 candles.
Moving average helps us in 2 things. Identify the trend. And, simplify the price action of the asset.
When the price is in an uptrend, we see that the price stays above the moving average, and the moving average is sloped upwards.
On the other hand, in a downtrend, we see that the price stays below the moving average is sloped downwards.
In a sideways range, we can see that the price moves around the moving average, and the moving average stays flat.
Another characteristics of a moving average is that, they act as dynamic levels of support and resistance.
So, in an uptrend, whenever the price makes a pullback to the moving average, it finds support and resumes the uptrend.
Similarly, in an downtrend, the price finds resistance at the moving average.
Different moving averages indicate different trends. We will use the 9, 20, and 200 period EMA.