Two Ema and Laguerre 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 Two Ema and Laguerre Trading System For MT4 is an intraday trading strategy designed to trade the 5 minutes and 15 minutes charts. This trading strategy relies on functions of Exponential Moving Average and Laguerre indicators.
Since the trades will be taken in the 5 and 15-minute chart, it is better to avoid the trade signals formed right before any major news release. As major news creates intense volatility in the market, it may become tough for novice investors to keep pace with the market.
The Two EMA and Laguerre Trading System For MT4
To identify the strength between the buyers and sellers, we will be using the EMAs. Before getting into the details of this strategy, let's see the key indicators used in this strategy.
- Exponential Moving Average (EMA) 16
- EMA 48
- Laguerre
The Exponential moving average provides the average price for the assigned period. However, the data is calculated by giving emphasis to the most recent price movements. Since the recent price movement is reflected in the EMAs, the 15 minute and 5-minute chart syncs well with this strategy.
If the price trades above the 48 EMA, you can assume the bulls are in control. On the contrary, if the price trades below the 48 EMA, you can expect the bears are in control.
On the other hand, the overbought and oversold state of the asset is determined with the Laguerre indicator. Like Exponential Moving Average, Laguerre focuses on the recent price movement. Thus we can get more accurate signals by using two indicators that work on the basis of the same principle.
With the help of this trading system, our main goal is to identify the direction of the trend with the help of 48 and 16 EMA. The Laguerre indicator will act as a trade filter tool.
Bullish Trade Setup
The long trades can be taken by checking 4 simple parameters. Before we move to the trading conditions, we recommend the retail traders to pick their trading instruments carefully. the system usually works in the trending asset. So, if you use this system in the ranging market, you might not get the maximum benefit from this system. However, skilled traders can use price action signals and may find profitable trade signals in the ranging instrument without facing much hassle. Without further delay, let's check the conditions to take the long trade.
Bullish Trade Condition
- The price should be trading above the 48 EMA.
- The 16 EMA should be trading above the 48 EMA.
- We need a bullish candle right at the 16 EMA.
- Laguerre reading should be above the 0.8 Level.
Entry
We can take our long trade right after the formation of the bullish candle near the 16 EMA. The 16 EMA is going to act as a support level. But all other trading conditions must be filled before we can open a buy order.
Stop Loss
According to the inventor of this strategy, the stop loss should be limited to 30 pips.
Take Profit
We have to close the trade when the 16 EMA crosses below the 48 EMA. We can also use 60 pips to take profit since the suggested maximum stop loss for this system is 30 pips.
Bullish Trade Example
Let's have a look at the image below:
1. EMA 16 crossed over the EMA 48. During that time we have a bullish candle right above the 16 EMA.
2. The Laguerre reading is also above 0.8 to support the bullish trade.
3. The first take profit hit as soon as the price reaches 30 pips.
4. We can close the trade manually with profit after 16 EMA crossed down the 48 EMA.
Bearish Trade Setup
For the bearish trade setup, we will stick to the major currency pairs. However, if anyone feels confident to trade minor or exotic assets, they should first test this system in the demo account.
Bearish Trade Condition
- The price is trading below 48 EMA and the slope is negative
- 16 EMA is trading below the 48 EMA.
- A bearish candle is formed right near the 16 EMA.
- Laguerre reading is above 0.2 Level.
Entry
After getting the confirmation, we can take our short trade. But we should carefully determine the lot size since taking more than 2% risk may create intense stress in our trading career.
Stop Loss
Just like our long trade, we can use 30 pips stops for the trade. But those who are good at using the trailing stops, may move the SL price to the break-even point after 20 pips profit.
Take Profit
The minimum take profit for this should be set to 30 pips provided that we are using a 30 pips stop. But based on the market condition, we can change the SL and TP range. But to avoid the hassle, the inventor of this strategy suggests maintaining a 1:2 risk to reward ratio in each trade.
Bearish Trade Example
Let's have a look at the image below and match the trading condition:
1. EMA 16 crossed below the EMA 48.
2. The reading in the Laguerre is below 0.2 to support the bearish trade.
3. The first take profit hit as soon as the price reaches 30 pips.
4. We can manually close the trade after the 16 EMA crosses above the 48 EMA.
Conclusion
The system mostly relies on the EMA cross-over technique. As a new user, we suggest trading in the 15 minute time frame. As soon as you become comfortable with the key steps mentioned in this article, you can trade in the 5-minute chart. But in each trade, limit your risk by using the standard money management rule. At times, you might get a very reliable trade signal still you should not risk more than 2% of the account balance.
Download the complete system description and the files here:
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