Author Topic: Variation on the EMA Scalp Trade  (Read 1826 times)

Offline TC1

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Variation on the EMA Scalp Trade
« on: April 08, 2014, 09:28:56 AM »
A variation on the EMA scalp trade ...this does not require a MACD but instead uses a combination of the 21 ema and 50 sma to align you with the trend. Essentially you are selling pullbacks to the 50 sma. Look for a downclosing range bar (I am using 8 pip bars) at the 50 sma (entries A and B in the attached). The bar can close above the 50 sma but 21 ema must still be below 50ema and both trending down (obviously the opposite applies for an uptrend).

Alternatively you can use a retrace to the 21 ema, but consider reducing your size (see entries C + D)

A less aggressive entry can be taken by looking for a break of a trendline drawn up the lows of pullback bars.

A few points:

- Obviously any simple strategy involving MAs can be enhanced by plotting S/R levels on you chart. At a minimum daily pivots and psych levels. These will give you some better targets and keep you out of trades that potentially offer a low r/r.
- use a single candle (the trigger bar) as a stop, so risk is 8 pips plus spread.
- with entries at the 50 ema, a 1:2 r/r is usually doable, sometimes much more. Again with the addition of S/r levels you can better gauge the likely  extent of a move.
- personally I would not take more than 2 trades off the same MA in the same direction in the same session; you are expecting an extended wave pattern otherwise, which puts the odds against you.

Hope that helps ..