5EMA And 12 EMA With 21 RSI Forex Trading Strategy

This is a very simple forex trading strategy. The beauty of this forex trading strategy is that you don’t need to do a lot of technical analysis.

All it would probably take just a 5 second scan of your forex charts and you’d know whether you’d take a trade or not.

 

FOREX INDICATORS REQUIRED: 

  1. 5EMA
  2. 12 EMA
  3. RSI 21 (Under Parameters, you have the set the “Periods=21”

TIMEFRAMES REQUIRED: 1hr and upwards

 

THE RULES OF THE 5EMA AND 12 EMA WITH 21 RSI FOREX TRADING STRATEGY

Buying Rules:

  1. When 5EMA crosses 12 EMA to the upside, that’s an indication that the trend has changed to uptrend.
  2. Next you look at the RSI Forex Indicator and If its above 50, then Buy. I suggest you buy immediately at market Price.
  3. Place your stop loss at least 2-5 pips below the low of the cross-over candlestick.

Selling Rules:

  1. When 5EMA crosses 12 EMA to the downside, that’s an indication that the trend has changed to a downtrend.
  2. Next you look at the RSI Forex Indicator and If its below 50, then Sell. I suggest you sell immediately at market Price.
  3. Place your stop loss at least 2-5 pips above the high of the cross-over candlestick.

5EMA And 12 EMA With 21 RSI FOREX TRADING STRATEGY

 

TAKE PROFIT TARGETS

Couple of options you can use to set your take profit targets.

  1. Set profit to 3 times what you risked. For  example, if you risked 30 pips then set your take profit target at a price level that when the market reaches it, you will get 90 pips.
  2. Or if its a buy trade, look to see if there a previous swing high which the price can reach easily and just make sure its at least if price reaches that level, you will have 2 or more times the risked you put for that trade.

HOW TO MANAGE YOUR TRADE

You should know that the forex market is very unpredictable. Learn to protect your profits. And how you do that is by managing your trade that is profit and locking in profits as the trade moves in favor by using trailing stop loss.

Here  are some options on how you can trail stop your profitable trade:

  1. If price moves in favour and you are in profit, move your trailing stop and place behind “bottoms” in a buy trade and above the “tops” in a sell trade. This is the best trailing stop technique. The chances of you trade being stopped out prematurely are minimized using this technique.
  2. The next option is to move trailing stop by certain number of pips when price moves by a certain number of pips. Forex example, if price moves by 20 pips than move trailing by 10 pips. This means for every 20pips price move, you move your trailing stop by 10 pips.

I prefer the option 1. This allows me to lock in profit and continue to ride the trend for as long as I can until I get stopped out by the market.

 

Trailing Stop Technique To Protect Profits

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

So there you have it, the 5EMA And 12 EMA With 21 RSI Forex Trading Strategy, a simple forex swing trading strategy  that you can use for swing trading. Try it out and see how it works for you.

 

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2 Responses to “5EMA And 12 EMA With 21 RSI Forex Trading Strategy”

  1. John Mike Trader says:

    Hi!

    Nice strategy and rules…

    Do you think this strategy can work with stock market?

    Thank!

    JMike

  2. Mangi Madang says:

    JMike,

    I believe whatever systems you find here can work for any market.

    Cheers

    Mangi

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