Keep It Simple Stupid (KISS)
Is one of the best terms I have come across during my years of day trading and one of the simplest ways is to use a moving average in your day trading system?
I use an easy to understand triple EMA exponential moving average as part of my overall trading strategy?
Having trouble with all the jargon click here for bullet point explanations of the terms used and don’t worry I will explain it all here for you as well.
As well as training blogs, I post my daily trading activity with individual images of each part of my strategy. For three different popular stocks click here to take a look.
Included within the blog is the next day’s pivot levels to trade from, you can use the blog to see how I trade or you can use the data for yourself.
Some traders use 15 monitors and several indicators on each chart
I can even show you how to have multiple stock charts running even on a basic computer I just bought a new laptop for £239 and run three charts easily.
A Little About Me
You may ask why am I setting this website up and trying to teach you how to trade why don’t I just make all this money and keep it to myself.
I will be brutally honest with you here its a risky business and I have lost a lot of money before because I didn’t stick to a strategy.
It has effected my trading to the point of me been scared to open a large position and acting when I should usually afterwards
I can see it on the charts and when I open its too small stop or I missed judged it or some other excuse I’m not sure if it’s down to my dyslexia or not.
I have had a year off and back on the wagon again using my demo account which is at £1500.
My promise to myself is to double that to £3000 then I will put the money I have saved into my trading account.
I thought I would just document all the things I am doing and what I have learnt and hopefully help others out along the way and build my confidence and start trading again and hopefully start earning some money from my blogs and website as well.
Anyway enough of
you can then find out what I have done and how I have gotten to where I am now.
so without further ado here we have my EMA strategy and how I trade it.
My Trading Strategy
I day trade using three different methods from the same chart, I am going to document each one this is the first one so I might be back to edit and add more info as my journey continues.
I use the following for my strategy.
- EMA – Exponential Moving Averages
- Pivots – support and resistance My own recipe if you like to call it that
- Open – Both the UK open and the USA open
If you require my daily pivots or you would like pivots working out for different stocks please just drop me an email its all free email@example.com or click here to join my mailing list
Each method mentioned above has its own merits and uses but they can complement each other at times.
Day Trading EMA or MA
EMA = Exponential Moving average MA = Moving Average If you would like to learn some more about moving averages I have written another blog explaining just about everything to do with moving averages and how they are worked out just click here.
Below is today’s chart as I write this blog it’s charting WTI Crude Oil. each candle is 5 mins time frame and the EMA lines are 14, 30, and 50.
14 + 30 + 50 EMA Ex
ponential Moving Average
Funnily the chart above is trending really well and
As with any trade
I hope we take this journey together and become a successful.
Why have I chosen 14, 30 and 50 ema you might ask well after reading and researching multiple time frames and hours and hours of back testing its just numbers that work for me so I have stuck to them.
Some traders recommend 100 – 200 they are some of the most popular ones to use check it out on your own charts.
But I have found with any trading strategy you can spend weeks if not months trying changing and altering your entire strategy for it to still not work out so you have to eventually decide on something and stick with it.
That’s what has brought me to this strategy i back tested look at various ways of trading and results and decided on a three process strategy. That’s why i am sticking with it whether it works out or not.
I am going to record and post daily blogs with my results and what I have done for you all to follow the good the bad and the ugly.
Using Heikin Ashi Candle
The candles I use for price actions are heikin ashi click here for an explanation of what candles are and specifically heikin ashi.
I think they just make for a cleaner chart to help with direction open and when to close a position but take a look at other price indications as you may prefer something else.
Day Trading With EMA
The green line on the chart EMA 14 is the quickest line to move as it’s taken from the last 14 results.
The candles/price are respecting this line and bouncing off multiple times I have profited today trading but as mentioned its only a demo account but its progress.
The other two lines on the chart are 30 EMA (YELLOW) and 50 EMA (RED) the only difference between them is that they take more results into consideration for the result it plots.
Day Trading When To Open A Position
We need to put a stop loss in place first it is the most important part of trading it doesn’t matter about profit or strategy
The way to trade this strategy would be to open a long position on a green candle confirmation after a group of reds.
For example:- just after 9 am on the chart the market has a pullback to the 14 EMA line see the 6 red candles it then starts slowing down see last 3 red candles with wicks either side this is called consolidating.
As you can see from the results using a triple EMA on different time frames for your moving average day trading strategy can really be beneficial.
But when you add in the other methods you don’t only have one way to open a trade you have multiple ways.
As mentioned above and following the red candles there is a green candle which confirms the trend has been resumed
BUT and its a big but its not guaranteed by any means.
For purposes of this blog, I will use the chart above and the 9 Am example again once the green candle is confirmed completed you can open a long buy position.
But first, you set your stop loss just below the last lowest red candle only Mabey 3-4 pips as you need to leave a bit of slippage for the broker and bounces.
When To Close A Day Trading position
Whilst using a moving average day trading strategy its difficult to call a profit and a close position as there feels there is just so many chances and you don’t want to close too early so its had to decided when do I close my profitable position.
Some traders say double your stop-loss level so if you have a stop loss of 10 pips you wait until your trade is at +20 pips then close
I just cannot see any sense in doing this as the market as seen on todays chart has almost moved 200 pips and you could have opened multiple positions throughout the day.
I Might come back and edit this blog as my trading progresses as I have had a year away from trading and coming back fresh and having a different outlook at the markets.
But my method is to have an idea of the max profit you would want ie 100 pips once you reach that level close that’s 10 losses to you.
How do I do that you ask well I use the wave theory as the price moves up and pulls back giving higher highs and higher lows I adjust the stoploss accordingly to the low that has just been created
as explained above with your stoploss just put it to the last lowest red candle of the wave I have just added a new chart as its a few hours later now since I started the blog so you can see the progress.
Example EMA report and Images
I will now upload some charts and put a brief explanation about what is happening with the lines as they move from confused to trend into consolidation.
Above is the completed chart for Friday as you can see after 7pm uk time the market starts to drop and cross the EMA lines the lines follow suit 14 EMA green first then 30 EMA yellow Finally 50 EMA red.
As the price starts to move and the lines start to cross one going up one down this indicates that faith in the trend is starting to fail and classed as a confused market with regards to the Ema trading.
You wouldn’t open a position you would just sit on your hands and wait for the market to go back into a trend before you consider opening a position.
WTI Crude Oil EMA Chart 04/06/2020
As you can see on Thursdays chart if you where trying to just trade EMA you probabully would end up at a loss by the end of the day as its a choppy market with price swings up and down.
12:30 was probably your best chance to get in to a trade but still a risk of running in to a loss if your position wasnt managed correctly.
WTI Crude Oil EMA Chart 03/06/2020
On Wednesday the EMA trading strategy worked really well for the morning.
i will plot the trade you could have taken and pips you could of closed at.
First thing you do is find your stoploss.
10:35am just completed the first red candle in the direction you are wanting to trade.
open trade at $37.40
Stoploss at $37.60 which is three pips above the previous high at
Set a profit call 30 pips lower $37.10 close half the position here then move the stop loss to 10 pips and monitor the trade if you followed the wave pattern as I explain in a previous blog the lowest it goes is $35.89 which is 151 pips if you closed there it was a fantastic choice but hard to come by the best I usually aim for if everything is perfect is 100 pips but that’s up to you and your risk-reward
Back Testing Moving average strategy
The method of back testing involves taking your strategy and inputting the data onto the chart ie trend lines, Bollinger bands, stoch whichever you need to add to help with your plan.
Then saving all the data and analysing it so you can see what happens when you chosen set of results occurs and the probability of a profitable trade occurring.
I would suggest once you have read and understand this part of the strategy, back test it for yourself which ever software you decided to choose.
Once you have read all of the info and are happy with how the system works, then move onto the next part.
I see each part is vital and has a purpose like an engine once its all put together it works right but sometimes goes wrong needs a bit of maintenance and love for it to work better for longer.
Trading Exponential Moving Averages.
Below is a few more examples from different stocks at different times if
It’s not a regular occurrence that it just trends up all day there are times that the market win whip up and down and sideways which isn’t very helpful for trading the EMA that why we need to implement a stop limit when you get near that amount close your computer down walk away and wait until tomorrow.
Its one of the hardest things to do when you’re chasing your losses but trust me thats the best thing you can do.
I hope you have taken something from this post and are able to apply it your strategy. or if you wish to follow me you can move onto the next part of my strategy which is pivots.
Why they are there and the relevance of them within a trading plan.