Super simple and high accuracy “5 MA Fractals Adjustable Price Breakout Trading Strategy” – Today, we are going to take a look at how you can use 5 Exponential Moving Averages and Fractals to analyze price charts.
While there are a number of moving averages, you only need to learn one or two to be successful.
In this post, we will first explain at a high-level what is an exponential moving average. Then we will dive into a few strategies and lastly close out with where the indicator can fail.
- Time Frame: H4 or higher
- Currency Pairs: Any
- Fractals – Adjustable Price Breakout
- 5 Exponential Moving Average (Open)
- 5 Exponential Moving Average (Close)
- Relative Strength Index
Why Professional Traders Prefer Using the Exponential Moving Average (EMA)?
When it comes to live trading, professional traders and quantitative analysts tend to favor the Exponential Moving Average (EMA) versus the Simple Moving Average (SMA) or Weighted Moving Average (WMA).
The Simple Moving Average places no emphasis on recent price action, so this isn’t even a fair fight.
When calculating the Weighted Moving Average, you have to use a consistent weight or multiplier in the formula. For example, the WMA price may decrease by 5 for every preceding candlestick to give more weight to recent activity.
By contrast, when calculating the exponential moving average (EMA), the weight or multiplier is not consistent but places more importance on recent price movement.
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- Use a demo account or a small live account first to practice this trading system
Therefore, the Exponential Moving Average (EMA) reacts much faster to price dynamics and offers a more accurate representation of trends compared to the SMA and WMA.
- Download TraderVersity.Com-5EMAFractalsSystem (Zip File)
- Copy mq4 and ex4 files to your Metatrader Directory …/experts/indicators /
- Copy the “TraderVersity.Com-5EMAFractalsSystem.tpl” file (template) to your Metatrader Directory …/templates /
- Start or restart your Metatrader Client
- Select Chart and Timeframe where you want to test your forex system
- Right-click on your trading chart and hover on “Template”
- Move right to select TraderVersity.Com-5EMAFractalsSystem
- You will see “Forex 5 EMA Fractals Adjustable Price Breakout Trading System” is available on your Chart
- Fractals – Adjustable Price Breakout: Blue line below the previous swing low
- EMA: 5 Exponential Moving Average (Close) > 5 Exponential Moving Average (Open)
- Relative Strength Index: Above level 55
- Fractals – Adjustable Price Breakout: Red line above the previous swing high
- EMA: 5 Exponential Moving Average (Close) < 5 Exponential Moving Average (Open)
- Relative Strength Index: Below level 45
There are times I see traders with a ton of moving averages on one chart. Now what I would advise you to do is not use four or five averages looking for crossovers on each one to generate trade signals.
This is honestly the simplest Moving Average strategy.