The 50EMA Swing Trading System is also one very simple and basic forex swing trading system that is easy to implement and can be applied to all timeframes and any currency pair as well.
Instead of 50EMA, you can also try other EMAs like 10, 20, 30 ema’s etc. The trading rules would still be the same.
THE TRADING RULES OF THE 50 EMA SWING TRADING SYSTEM
- Wait for price to break the 50ema to the upside or downside.
- The candlestick that breaks the 50ema either upwards or downwards is your entry candlestick.
- Place your buy stop order or sell stop order using this entry candlestick anywhere from 3-5 pips above the low or high of the entry candlestick.
- Your stop loss should be placed anywhere from 5-30 pips above the high or low of the entry candlestick.
- Take Profit and exit your trade
HOW TO MANAGE A TRADE/EXIT A TRADE
There are a few options which you can use to manage a profitable trade:
- move stop loss to breakeven when price moves by the amount your risked. Sometimes you may get stopped out easily with this option.
- or you can wait until price forms those peaks and valleys of price swings and use these price swings to move stop loss to lock in more profits as price moves favourably. See chart below for more clarification
ADVANTAGES OF THE 50EMA SWING TRADING SYSTEM
- Easy to understand and implement
- in a good trending forex market, this trading system can give you a lot of profitable pips easily.
DISADVANTAGES OF THE 50 EMA SWING TRADING SYSTEM
- Moving Averages forex indicators are lagging indicators which essentially means that price moves ahead and the ema indicator responds to this price moves late.
- This swing forex trading system will not work so well in a non trending market.
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