Exponential Moving Average Forex Trading Strategy

In an attempt to average out market fluctuations, traders are constantly inventing new strategies based on moving averages. In this article, we’ll look at one of such strategies that use EMA and fractals.

To see the EMA strategy in action, let’s take an M15 chart on GBP/USD.

  • Currency pair: GBP/USD
  • Timeframe: М15
  • Indicators: EMA(34, High), EMA (34, Close), EMA (34, Low), EMA (12, Close), Fractals

The good thing is that the strategy only involves standard indicators that can be found in any trading platform. As for the strategy rules, they are easy to understand even for a rookie trader.

How to use the EMA strategy

You need to go long if EMA (12, Close) crosses all three EMA(34) lines upwards. Wait till a new candle opens and then enter the market.

A stop loss is set at the nearest fractal below the EMA(34) channel. A take profit must equal to a stop loss. Alternatively, you can use a trailing stop or close a trade once the opposite fractal occurs.

ema forex trading strategy


For a short trade, the opposite entry conditions apply. You need to open a short position when EMA(12, Close) crosses all three EMA(34) indicators downwards. Here again, you need to wait for a new candle before making an entry.

short trade EMA

Avoid opening a position if EMA(12, Close) is moving along the EMA(34) channel for a long time, or if EMA(12, Close) fails to cross all the EMA(34) lines (i.e. leaves the channel soon after entering it).

ema forex strategy