How to use EMA to spot the entry point for forex trading |

"Moving average is one of important forex trading technical indicators. It is a must and widely used in order to assist forex traders to analyze time series data. Traders are able to work out a moving average for any time series, but an important thing is to work out a moving average over the price of currency pair in the end.

The moving average, which is also quantified as an averaged quantity can be taken as a good illustrative to be a symbol of the forex market activity in progress as well as to indicate the trend that can affect the volatility of the market. The moving average also can tell you in advance any possible longer term trend. However, in order for a moving average to assist you in indicating short term or long term trends, the moving average’s parameters should be put in placed accordingly.

Basically, there are three different kinds of moving averages which are simple moving average, weighted moving average and exponential moving average. All of these are moving averages, but they are different in term of how they are weighted according to the period of time for the moving average indicator’s final value.

As for the exponential moving average or EMA, which is also known as exponentially weighted moving average or EWMA, when you work it out, you are actually determining the weighted factors that reduce exponentially. It gives you an indication that more significance factor is given to the most recent data.

From the computation which generated by a exponential moving average, we can say that the exponential moving average acts in response to the changes of currency price quicker in comparison to a simple moving average. In general, the exponential moving average which well known as an indicator for the short period of time averages are 12 and 26 days whereas the exponential moving average which well known as an indicator for the long period of time averages are 50 and 200 days.

Among all of the exponential moving average, the 200 days is the most popular one and widely be used by forex traders all around the world. In order to make the full use of this forex exponential moving average trading strategy, you should set up charts in 3 different periods of time frames which are 4 hours, 1 hour, and 15 minutes.

Then, you mark a 200 days exponential moving average indicator on every chart, and preferably you can color it so that you can easily distinguish them. You may also consider to set up the 3 windows which consisting of 3 period of time frame charts vertically and side by side so that you can view and monitor them easily.

Now choose the currency pairs you wish the trade among a variety of them. Then you should watch out for a currency pair that gives you profit and jump onto 200 exponential moving average on the 15 minutes chart.

Let say, you are trading the EUR / USD pair take a close look at the price spots compared to the 200 exponential moving average on the 3 periods of time frame charts. If the price is on top of the 200 exponential moving average on the 4 hours as well as 1 hour chart, but lower than the 200 exponential moving average on the 15 minutes chart, the currency price trend is about to start. The general trend is moving up ward when the price goes back over.

By utilizing the most common strategy in forex trading which is buy low and sell high, you can spot some suitable points to get in when you trade. Let say, you are waiting for the moment to buy the EUR / USD currency pair, you can take a closer look at a candlestick indicator in order to see the price’s down ward trend is about to finish, the 200 exponential moving average jump onto the 15 minutes chart, so the up ward trend is going to begin again.

When you notice the price jumps onto the 200 exponential moving average on the chart of 15 minutes, while at the same time the price is at the lower of the 200 exponential moving average on the 4 hours and 1 hour charts, you should monitor them closely and carefully as you are going to take the chance to enter the trade and make some profits.
Upon practicing a few times you will find how useful the forex exponential moving average trading strategy is for you to spot the entry point of your trade and end up with profits."