5-8-13 EMA Strategy
5-8-13 EMA strategy uses three exponential moving averages with a period set at 5, 8 and 13; by doing this it combines a multitude of past price data and by judging the three side by side it will help in identifying potential trading opportunities, exit and entry points as well as trend direction.
How We Use It:
This strategy is fairly straightforward to understand. If all three moving averages are pointing down, we can see that the current trend is down; if all three are pointing up then we can understand that the current trend is up.
- Buy Opportunity – 5 EMA crosses above the 8 & 13 EMA this indicates a strong momentum in the upward direction and signals a potential buy opportunity. If we were on a downward trend and then you notice the 5 EMA is beginning to cross above it indicates a trend direction in the upward direction.
- Sell Opportunity – 5 EMA crosses below the 8 & 13 EMA and is pointing down it is a signal of a sell opportunity and a downward trend. Again, if we were in an upward trend and the 5 EMA begins to cross below it is an indication of a trend reversal towards a downward trend.
Ideal Time Frames:
This strategy is ideal for a short-term trades and is not as accurate on larger time frames; in our opinion the ideal time frames would be 15 minutes, 30 minutes and 1 hour. When using the EMA strategy if you are trying to identify a cross over, use two time frames as one factor of confirmation, if both time frames are showing a cross over it will help identify short term direction along with the first stage of confirmation.
5-8-13 EMA strategy is a very common trading strategy used throughout the trading community; it is important to remember no strategy is ever going to be 100% accurate. However, this combines past price data and can give a quick indication of trend direction and potential trend reversal, but you need to know how to action efficiently and execute the trade to give you the best possible chance of success; as well as incorporating confirmation indicators.
Learn How To Implement:
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It is important to remember that everything stated within this blog post is our opinion based of our own personal experience as well as the feedback given to us from our clients. Trading is all about finding what works best for you; so, we do recommend trying a variety of different indicators and strategies and finding what works best for you.
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