Bouncing Ema and KG analysis Trading System For MT4

Bouncing Ema and KG analysis Trading System For MT4

Please note: This strategy was publicly published in the trading community and is free to use. We do NOT make an attempt to decide if this strategy is profitable or not, because we know that the major factors regarding trading results are the skills/experience of the trader who executes the strategy. Therefore, we are mainly explaining the components and rules of the strategy. If applicable, we are highlighting advantages, disadvantages and possible improvements of the strategy.

 

The Bouncing Ema and KG analysis Trading System For MT4 is a simple strategy providing useful information regarding the trending and retracement phase in the asset. With the help of this trading method, retail traders can identify good trading spots in any asset. According to the inventor, it is better to use this trading strategy in the M30 or higher time frame as the price movement is bit more stable compared to the M15 or lower time frame.


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What is Bouncing EMA?

EMA or Exponential Moving Average counts a certain number of bar movement and analyze the strength of the trend.

Why is Trend Important in Forex Trading?

There is a saying, " The trend is your friend". If you want to reduce the number of losing trades, you should learn to trade with the key trends. The rookies often think, taking the trades with the key trend is a simple task. But if you do the market analysis, you should realize, identification the trend is not that simple. Even after knowing the core function of the EMA, it often becomes difficult to determine the proper value for the EMA for a certain trading instrument.

With this system, we will look use the EMA as the support and resistance. That means the price will most of the time bounce at the EMA during a bullish trend. And it will reject the EMA during the bearish trend.

 

What is KG Analysis?

KG analysis is a process by which we will define the important trading parameters with the help of ATR, Daily or weekly range, Trend analysis, etc.

The KG analysis is an indicator that is free to download for the MT4 platform. If you want to get a summary of the market outlook, this indicator might help. However, in this trading strategy, we will focus on Bouncing EMA, and the functions of the KG indicator will be limited to the trade filtering process.

 

The Bouncing Ema and KG analysis Trading System For MT4

EMA can act as an excellent support and resistance level. But we should have the skills to use the right value for the EMA. Lets see the prime settings used in the key indicators for this trading strategy.

 

  1. Exponential Moving Average (EMA)- value 100
  2. Exponential Moving Average (EMA)- value 200
  3. Moving Average Convergence and Divergence (MACD)- value (12,26,9)
  4. Stochastic Oscillator- value (5,3,3)

 

Let’s see how the chart looks like after implementing these indicators:


Note that, the functions of the MACD and the stochastic indicator are related to the trade filtering process only.

 

Bouncing Ema and KG analysis Trading System For MT4 - Bullish Trade Setup

We have already pointed out, the system will be used in the M30 or higher time frame. Another key thing we should consider is the news events. It is better to avoid taking the trades during the major news release as it will make things complex. Now let's have a look at the condition and learn to take the long trades with low risk.

 

Bullish Trade Conditions

  1. Identify a bullish trend by using a positive slope in the EMA
  2. After the news, the market should consolidate and tests the EMA 50 (in M30) or EMA 100.
  3. After getting rejected from the EMA 50 or EMA 100, the price should continue to rise.
  4. We should notice a Bullish crossover in the MACD indicator.
  5. Stochastic reading should be near the 20-0 zone.


Entry

After checking the necessary condition, we should find the optimum lot size to keep the risk factor below 2% of the account balance. Once we have determined the lot size, we can execute the trade.

 

Stop Loss

The stop loss can be set by using the EMA as it will act as a strong support level. Skilled traders may use the price action signal to determine the tight stop loss for the trade.

 

Take Profit

usually, the take profit level is set to the nearest support level. However, if you are good at using the trailing stops, you can keep on moving the SL price after each resistance level is broken.

 

 

Bouncing Ema and KG analysis Trading System For MT4 - Bearish Trade Setup

 Now let's see how we should find the bearish trade setups in the market.

Bearish Trade Conditions

  1. Identify a bearish trend by using a negative slope in the EMA
  2. After the news, the market should consolidate and tests the EMA 50 (in M30) or EMA 100.
  3. After getting rejected from the EMA 50 or EMA 100, the price should start falling.
  4. We should notice a Bearish crossover in the MACD indicator.
  5. Stochastic reading should be near the 80-100 zone.



Entry

After checking the required condition, we can take the short trade. Traders who are good at using the price action signal may use the bearish price action confirmation signal to take the short trade.

 

Stop Loss

The stop loss for the trade should be determined by analyzing the nearest resistance. Traders may also rely on the bearish price action confirmation signal to determine a tight SL.

 

Take Profit

The take profit level should be determined by analyzing the nearest support level. But we should be careful about the risk to reward ratio. If you trade with a low risk to reward ratio, it will be hard to recover the losses.

 

 

Bouncing Ema and KG analysis Trading System For MT4 - Conclusion

By now you know the key steps to using this strategy in any time frame. But as a novice trader, we recommend using this strategy in the practice account as it will allow you to learn things without risking any real money. Trade in the demo environment until you feel confident with this system.

 

Note that, no trading system in the world is perfect. So, you should be expecting some losing trades while using this strategy. In fact, it will be wise, if you test this trading method in the practice account and determine whether the system suits your personality or not.

 

Download the complete system description and the files here:

FREE Bouncing Ema and KG analysis Trading System

Download the FREE Bouncing Ema and KG analysis Trading System for MT4.

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