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Exponential Moving Average (EMA)

EURUSD 1D MEAN REVERSION TRADING STRATEGYBest Mean Reversion Strategy: Before we get to that point, first and foremost, let’s see what tools we need to use for this strategy. The best mean reversion indicator that works 85% of the time is the RSI indicator. So, you will need the RSI oscillator on your charts. Now, there is one more important thing that needs to be done. The RSI settings must be changed from the default 14-period to 2-period RSI. So, we’re having not just any type of RSI, but a very fast RSI. Levels are 10 & 90. The other technical indicators we’re going to deploy on the charts are: 10-period simple moving average. 200-period moving average. Note* Another thing to keep in mind is the recommended time frame is the daily chart. Intraday charts won’t work because the fast-period RSI will generate a lot of false signals on lower time frames. Now, let’s see how we can combine the 3 indicators into a profitable mean reversion strategy. The first obvious question is when to buy and sell currency. To answer this question the mean reversion trading strategy needs to satisfy 3 triggers: The price needs to be above the 200-day EMA. This means that the overall price is in an uptrend so, we’re only going to look for buy signals in bull markets. Second, we look for the price to below the 10-day SMA, which shows a deviation from its mean. Last but not least, we look at the RSI to overshoot below 10, which signals that we’re in oversold territory. Note* For sell signals use the same trading rules but in reverse. Once all 3 conditions are satisfied we enter a trade at the open of the following day. Once we’re in a trade we also need, we also need to know when to exit the market. This is where the 10-period simple moving average comes into play again. What we’re looking for is for the price to reverse back to the 10-period SMA strategy. More often than not the price will overshoot to the upside and break above the 10-period SMA. So, to fully capitalize on the entire move we use multiple take profit targets: The first profit target is to cash half of the position once we touch the 10-period SMA. The second portion of your position is left until we break and close above the 10-period SMA. Based on our backtesting result, on average your trades should reach the second target within 1-3 days. The longer you keep your position open, the lower the chances of the trade to succeed. As a general rule, you should cash out of your entire position within the first 3 trading days. Now, we have left out for last the most important part, which is managing risk. When it comes to the protective stop loss we’re advising not to place a stop loss right away, but instead, use a time stop. Let me explain… Based on our backtesting results we have found that a lot of the times the market will do a false breakout below the previous day low (high) and hurt our position. So, to avoid this scenario we have found a great trick to move around it. Our rule is very simple: If by the first half of the day our position shows a loss, we close that trade and call it a day. This is a risky play but we have the edge on our side to play this kind of trick. After all, trading is a risky game and everyone needs to decide for themselves how to manage risk. Final Words – Best Mean Reversion Strategy In summary, the most alluring thing about mean reversion trading is the high win-loss ratio and the simplicity behind it. One thing to keep in mind is that the mean reversion strategy tends to perform poorly when the market is in a hard-mode trend. But that shouldn’t be much of a big deal since the market is ranging 75% of the time. The key takeaways from the mean reversion trading strategy are as follow: Mean reversion can be used with all asset classes (stocks, commodities, currencies or cryptocurrencies). Range trading and overbought/oversold signals work the best with this method. Adjust the RSI settings to a fast-period. You can generate quick profits – short holding time periods. A trading tip – use a time stop instead of a price stop. Thank you for reading! Mean Reversion Trading Strategy with a Sneaky Secret. In this guide, you’ll learn a mean reversion trading strategy with some trading secrets that will assist you to limit the downside. The first part of the guide will highlight what is mean reversion trading, while in the second part we’ll reveal the mean reversion strategy and how you can fine-tune it to fit your personality. If this is your first time on our website, our team at Trading Strategy Guides welcomes you. Make sure you hit the subscribe button, so you get your Free Trading Strategy every week directly into your email box. The mean reversion trading systems are more appealing to a lot of traders because it tends to have a higher win rate as opposed to the trend following strategies. Even when the markets are in well-established trends, mean reversion happens quite often. So, there are more opportunities to profit from mean reversion trading. Let’s kick the ball rolling and start with the basic by first explaining what is mean reversion in trading and then we’re going to reveal 5 trading principles that can be used with the mean reversion strategy. Table of Contents 1 What is Mean Reversion Trading? 2 How Mean Reversion Trading Works? 3 Why the Mean Reversion Strategy Works? 4 Mean Reversion Trading Strategy 5 Final Words – Best Mean Reversion Strategy What is Mean Reversion Trading? Put it simply; mean reversion trading assumes that over time the prices of any asset (stock, commodity, FX currency or cryptocurrency) in time will revert back to the mean or average price. In other words, reversion to the mean trading comes down to the old saying: “What goes up must come down.” The mean reversion theory is at the foundation of many trading strategies that involve buying and selling of those asset class prices that have deviated from their historical averages. The idea is that in the long-term prices will return back to their previous average prices and normal pattern. Example of mean reversion trading strategies includes: Reversals. Pullback trading. Retracement. Range trading system. Overbought and oversold strategies. Our best mean reversion strategy is to trade those price ranges that occur after a severe price markup or markdown. In this case, reversion to the mean implies trading around the middle of the range as our average price. In essence, mean reversion is playing around a central value be it the middle of the range, or a moving average, or however you wish to express it. The reversion to mean trading system tends to produce a higher win rate in those instances where we can notice extreme changes in the price. We can measure extreme price changes relative to the time frame used. Obviously, there is also a probability that the price will not revert back to its mean. This can indicate that there is a real shift in the market sentiment and we’re in a new paradigm. Now that we know what is mean reversion trading, let’s see how the mean reversion regression works. How Mean Reversion Trading Works? With mean reversion, we’re looking to trade against the heard. A lot of the times when you’re doing mean reversion trading, you’ll be quick in-and-out of a trade. That’s why day trading mean reversion strategy works better. There are other different ways to trade with the mean reversion strategy, including: Price stretch from a simple moving average strategy. A break outside the Bollinger Bands strategy and a return back to the mean. A test of support and resistance strategy while the price is consolidating. The linear regression is clearly slopping upwards and it’s acting as a magnet to the price. Each time the price deviates from the average price line it snaps back to it outlining the reversion to the mean concept. The main advantages of the mean reversion strategy include: Effective exit strategy – the take profit target is always the average price. High win rate – the shorter the mean reversion time frame used the higher the win rate. Good risk-adjusted returns. All trading strategies have their own pros and cons. The biggest flaw is that once you’re in a trade you’ll often see first a loss before you see a profit. The main components of the mean reversion strategy should include: 1. Entry signal after the price has moved away from its average price. You can simply calculate how far away percentage-wise are from the mean or use an ATR strategy multiple declines or simply use a volume oscillator to gauge oversold/overbought readings. 2. Exit signal gives you a way out once you get into a trade. 3. Broad market timing. Why the Mean Reversion Strategy Works? Mean reversion is a key element part of how all financial markets work. Mean reversion happens because the prices have a tendency to overshoot and undershoot their intrinsic value. These “price anomalies” happens because the impact of new information that hits the market takes time to be digested by the market. The market participants will take some time to understand the new information as the information is filtered slowly. Additionally, it takes time for the market to establish a fair value. Secondly, mean reversion trading also works because prices also move based on collective emotions. What this means for traders is that the price tends to overshoot to the downside a bit more than they overshoot to the upside. This is true because fear tends to be a bigger emotion than greed. Let’s put the puzzle pieces together and construct our reversion to the mean trading strategy.
Education
by Tradingstrategyguides
3
Price action below the 4hr H&s neckline target 22k if confirmed. The 21 daily ema is now current resistance overlapped with the inv 78.6 fib for double reinforced resistance. if this h&s triggers its breakdown here the measured move breakdown target is 22k What's more is the ever-important 21 weekly ema on the weekly timeframe(not shown here) is exactly overlapping the breakdown target for the h&s at 22k also overlapping the 50% fib this should create double reinforced support at this level All three combined create some extremely compelling bearish confluence...I think we head to 22k and then see a bounce from there based on the fact that we are overdue this bull run for a retest of the 21 weekly ema and the confluence of it overlapping the breakdown target and the 50% fibonacci retracement. Of course there is a chance this could be a fakeout if the inv 78.6(in teal) and the enckline of the h&s are flipped back to solid support. Must wait for confirmation here.
GEMINI:BTCUSDShort
by DrDovetail
1
Chainlink make support above of the EMA 200 in Daily chartOk, in this update, we see that in H2 timeframe Chainlink starting up becuase on Daily chart Chainlink still support for 4 days consecutive above of the EMA 200. That it's a good point to bought Chainlink!!! So, that mean that Chainlink it's ready to explode soon!!! So, I put a buy order limit at $11.30 USD with a SL at $9.88 USD and my own target profit will be $20 USD. So, as we are into this bearish channel, that show that Chainlink it's prepare to make a massive bull movement soon!!! So, I reccomend to put buy order limit or invest in Chainlink because we go like a skyrocket And don't missing this opportunity!!!
COINBASE:LINKUSDLong
by harisonhbn9718
3
SEYKM( SEYİTLER KİMYA ) LOGARİTMİK ÖLÇEK TEKNİK ANALİZ ÇALIŞMASIGrafikte görüldüğü gibi SEYKM hissesi logaritmik ölçekte incelenmiştir. Çalışmada 9, 20, 50, 100 ve 200 EMA ek olarak RSI göstergeleri kullanılmıştır. Hissede fincan/kulp formasyonu fiyatlanmış, fiyatlar Fibonacci kanalı %100 direncine neredeyse gelmiştir. Ayrıca RSI göstergesinde çizmiş olduğumuz yükselen trend çizgisi kırılmış ardından pullback yapmıştır. RSI'da negatif uyumsuzluk da oluşmuş ve 70 seviyesi altına gelirse mum grafikteki bordo yükselen destek kırılıp hissenin düzeltme yapma ihtimali gündeme gelebilir. Negatif uyumsuzluğun RSI 54 değerinde fiyatlanması beklenebilir. Ana destek mavi noktalı yükselen trend çizgisi, ara destek; bordo noktalı yükselen trend çizgisi ve yatay destek kırmızı yatay trend çizgisidir. Burada yazılanlar kesinlikle yatırım tavsiyesi olmayıp kendime notum ve çalışmamdır.
BIST:SEYKMShort
by BerkayEnz
GOLD Daily S/R| Swing High| .382 Fibonacci| Price ActionEvening Traders, Today’s analysis – GOLD- trading above Daily S/R where a retest is probable, Points to consider, - Price Action Impulsive - Daily S/R Support (.382 Fibonacci Confluence) - MA Golden Cross - Oscillators Bullish Control GOLD’s immediate price action is impulsive above Daily S/R, a retest will allow for a long entry. The Daily S/R is in confluence with the .382 Fibonacci, a pullback is likely to finish with a wick formation. Immediate averages are crossing (200 EMA&MA), this is a signal of a bullish cross being imminent. Both oscillators are trading in their respective bullish control zones, remaining in these regions is indicative of strength in the market. Overall, in my opinion, GOLD is a valid long with defined risk; price action is to be used upon discretion/ management. Hope this analysis helps, Thank you for following my work And remember, “Don’t blindly follow someone, follow market and try to hear what it is telling you.” ― Jaymin Shah’
TVC:GOLDLong
by AzizKhanZamani
8
How to use MTF T-Line (8 EMA)T-Line stands for Trigger Line and is 8 EMA, concept invented and taught by American trader Steven Bigalow. He uses daily 8 EMA and stays in trades as long as price is above or below 8 daily ema. If price closes below or above 8 daily ema in the opposite direction he exits. I went further with this concept, implementing Multitimeframe 8 ema trading system which is very effective. For that one needs indicator able to plot higher resolution EMAS on lower resolution charts (Moving Average Collection by Wataru Inoue can do that - www.mql5.com - better than TradingvIew MTF ma function). But you need a powerful PC (8 GB RAM at least) as many PC freeze when applying MTF indicators especially on many charts. For exits, reversal or entries you may add Pivots (Camarilla, Fibonacci Pivots seem to be most effective resistance support levels, especially longterm ones yearly, monthly, weekly). But you are free tp use Ichimoku, daily, monthly, weekly highs, lows or whatever level tools convinient. At least this system will help you to stay on the right side of the market. This sytem works well with gold, oil, sp500, eurusd, btcusd and many other pairs. Good luck my friends!
Education
by ICFX
EURCAD Daily S/R| Bearish Retest| .618 Fibonacci| Price ActionEvening Traders, Today’s analysis – EURCAD- price trading below Daily S/R where a bearish retest is probable, Points to consider, - Price Action Impulsive - Daily S/R Resistance (.618 Fibonacci Confluence) - 21 EMA Local Support - RSI Bullish Control Zone - Below Average Volume EURCAD’s immediate price action is below Daily S/R that is in confluence with the .618 Fibonacci, this allows for a bearish bias. The 21 EMA is current support, holding this level is crucial in the coming hours. The RSI is currently trading in its respective bullish control zone, holding this level is indicative of strength in the market. Volume profile as of now is trading below average, an influx is highly probable when testing key trade locations. Overall, in my opinion, EURCAD is a valid short with defined risk, price action is to be used upon discretion/ management. Hope this analysis helps Thank you for following my work And remember, “You have power over how you'll respond to uncertainty.” ― Yvan Byeajee
Short
by AzizKhanZamani
5
The 50 Moving Average - The best Indicator?It is clear why so many traders use the 50 period moving average, just one look at this chart shows how useful the indicator is. Used by traders as a dynamic level of support or resistance, the 50 moving average takes the last 50 candles / bars, and shows the average closing price of those 50 periods. You can see how the EURJPY has respected it as both a support and resistance, and often when price breaks through it in one direction it will retrace to retest the moving average. We recommend you learn more about both the simple moving average and the exponential moving average (weighted to favour recent data).
by ToniSignals
VTHO STEADY GROWTH? UPWARDS OF 40% GAINS INCOMINGBINANCE:VTHOUSDT A few days ago we looked at VET's bullish indicators. VTHO is the gas of the VeChain ecosystem, so generally if VET sees major growth in price and volume VTHO follows. Doing technical analysis on VTHO to confirm our beliefs, we see our EMA20 still trending above the EMA50. We just hit a very important point where price touched the EMA20 (first support). If we see a nice rebound and remain within the purple lines a nice bull run can be expected. The awesome oscillator also confirms this trend with the lines steadying out and turning red, best case scenario would be the lines to go back green and continue rising along with price. I try to point out these moves BEFORE they happen, not just post analysis on bull runs. Please understand this can still take a short turn down based on overall market sentiment, but most indicators point to be very bullish. This is not financial advice! Please trade at your own risk.
Long
by mattforutan
2