Ive been looking at trading with a EMA 200 line. Looking over the charts its a good indicator to show breakouts. I was just curious if anyone has any experience trading it?
Ive been checking it out on a hourly chart and getting nice results. Does 50 pip stop loss and 100 pips profit taking level sound alright?
What time frame are you going to be trading on?
A 200 MA will react differently to each successively longer period.
What are your signals?
A cross of price?
The time frame will also alter your stop loss.
a 50 stop on a daily chart may be nothing as the highs and lows will hit that on most days for certain pairs. Where as a 1 min chart a 50 pip loss will be obviously against the expected trend when using the 200 ema correctly.
Yea
I don’t really get it as well
How his he getting the signals?
I have an inkling he’s just looking for a break of the 200EMA as a signal for entry.
A break? What is that a cross?
To be honest, if you’re going use it a 200 EMA, i wouldn’t use it for breakouts, use it with something like a 55 + 21 EMa, use the 200 for trend direction.
as it’s 200 it takes alot to move it, which is good because you can see def which way the trend is strong at, however if the trend reverses, itll lag ALOT more than lower EMAs - thats why you can’t/shouldn’t use it by itself.
And how should we read the 55 and 21 EMA?
You’re looknig for a 55/21 cross, but to spot possible false crosses, (ones which will cross back like 5 candles later) i use STOCHASTIC.
So if 200 EMA is trending down, i’d wait for a 55/21 cross, then wait an extra candle to analyse the pattern the candle makes, for example if the candle produces what people say is a reversal candle, then i may hold off. (no problem missing a trade, there will be thousands more). If the STOCHASTIC has crossed above 80, then i’d short.
Personally I’m less inclined to short if the stochastic crosses below the 80, or above 20 depending on market direction.