5, 13, 62 Ema

[ivonivon]

I've just read a book written by Rob Booker. It's called a 5, 13, 62 strategy. I'm curious if some babypippers have applied it in their daily trading.

For thee who have tried it, mind to share your ideas and results here? Thanks

[n_aftab]

Hi mate

I myself use 10 and 25 ema, but in addition you can use the macd, rsi, par sar etc

I've tried 5 but it is very suseptable to whipsaws, meaning if theres a movement down from a uptrend the 5 ema will pick it up quickly, even though it may not really be a change in the trend.

Play around with them until you find a combination that your happy with, alos get a practise account and back test it, most of the charting packages hold history, so go back and then run it forwards candle by candle and see if it works for you.

[BigPippin]

The use of 3 different moving averages can be effective for trading. Play around with different values because each will give you different signals. One way to use them is to look for a crossover between your shortest EMA and your longest EMA. That would be your entry.

Your exit would then be when the short EMA crosses in the opposite direction with your medium EMA.

When all the EMAs are in order, then it signifies a good trend.

[philsfg]

Hey All, speaking of crossovers, I have recently came over from the stock/option side of the trading world. Over there, for the most part, I've been told to use the simple moving averages instead of the exponential. Over here in Forex world, the later seems to be the pick. Any reason why?

[BigPippin]

Originally Posted by philsfg

Hey All, speaking of crossovers, I have recently came over from the stock/option side of the trading world. Over there, for the most part, I've been told to use the simple moving averages instead of the exponential. Over here in Forex world, the later seems to be the pick. Any reason why?

EMA's tend to have bigger spikes because they put alot of weight on the most recent periods. This makes them react quicker. While this makes for catching trends quicker, it can also be prone to fakeouts.

It's really just a matter of personal style. If you like to use tools that put more weight on more recent data than use the EMA. However, if you like looking at the overall picture then an SMA is probably your best bet.

Happy trading!