3 EMA Trend Catcher Day Trade Forex Trading Strategy For MT4
The 3 EMA Trend Catcher Day Trade Forex Trading Strategy For MT4 is a powerful trend trading strategy mostly used by professional day traders. In this trading method, 10, 25 and 50 EMA has been used to identify the course of the trend. Usually, the 50 EMA acts as the signal line or the trend indicator. If the price is trading above the 50 consider the trend as bullish. On the contrary, price trading below the 50 EMA, is considered as a downtrend. Trades are executed based on the rejection of the 10 and 25 EMA.
To execute the long trade, the first condition is to identify the position of the price with respect to the EMAs. If the price is above the 50 EMA, look for the rejection of the 10 or 25 EMA. This means the candle will touch the 10 or 25 EMA and bounce back. In some cases, the price might fall well below the 10 or 25 EMA but it will close above the 25 EMA at least. If the rejection results in a bullish candlestick pattern execute the long trade. But note that the ADX reading must be above 30 levels. The stop loss should be placed just below the price action confirmation signal. For the conservative method, place the stops below the 50 EMA.
The short trades are taken when the price is trading below the 50 EMA. Look for the rejection of the 10 and 25 EMA. On a bearish rejection, execute the short trade in favor of the downtrend. In order to consider the pattern as a valid short trade signal, the ADX reading must be well below the 30 levels. The stop loss should be placed above the 50 EMA or the price action candlestick pattern.
The take profit level for both short and long trade will be set to the nearest support and resistance level. But the advance traders can use the trailing stops to ride the existing trend. Note that, when the 25 EMA and 10 EMA crosses the 50 EMA, it is a sign of trend reversal.
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