The 5 Minute EMA Strategy for Forex
So, you want to trade Forex, but have been failing, which is where this 5 minute EMA strategy comes into play. This 5 minute EMA strategy is one which our mentor, Andrew, absolutely loves, and it often leads to some significant profits.
Now, what you need to know here is that this particular EMA strategy is designed for short term scalping trades. In other words, it’s designed to place lots of trades in a short amount of time, based on a short history of exponential moving averages. Yeah, we know that it all sounds very complicated, but that’s what we are here for today.
Today we are going to give you a little crash course on exponential moving averages and what they are. We’ll follow that up by explaining Andrew’s own 5 minute EMA strategy for Forex scalping trades. This can be very profitable, and if you master this, putting money in the bank will become much easier.
EMA Basics – Exponential Moving Averages
Alright, so before we get into the 5 minute EMA strategy which Andy outlines in his most recent trading video, it’s probably a good idea for us to do a little tutorial on what exactly an EMA is.
EMA – The Exponential Moving Average
So, EMA stands for “Exponential Moving Average”, and this is a type of moving average, one that places a great significance on the most recent data. As you will see here today, Andy uses a 5 minute strategy, so really recent data.
Keep in mind that the EMA is a technical indicator, one used to produce buy and sell signals, which are based on divergences and crossovers from the historical average, although a short history. There are various time frames that can be used with exponential moving averages.
Exponential moving averages are often used in combination with other indicators to recognize and confirm market moves, as well as to assess their validity. Exponential moving averages are great to use when planning to trade in short time frames, such as the 5 minute scalping strategy we will discuss today.
Calculating an Exponential Moving Average
Calculating an EMA is something you will need to learn how to do if you plan on becoming a professional day trader. The first thing you need to do to calculate an EMA is to calculate the SMA or simple moving average.
This is easy. The SMA is simply the sum of a stock’s prices at closing time for a certain time period, divided by that time period. So, if you are looking at a 100 day chart, you would add the closing prices together, then divide by 100.
The next thing you have to do is to calculate the multiplier for smoothing for the previous EMA. The formula for this is as follows, [2 ÷ (selected time period + 1)]. So for a 100 day chart, the formula would be [2/(100 +1)]. Finally, the EMA is then calculated using the following formula, [Closing price-EMA (previous day)] x multiplier + EMA (previous day). This is how an exponential moving average is calculated.
Andy’s 5 Minute EMA Strategy – Scalping
Alright, so as you can see in the video from Andrew’s Trading Channel, it’s all about using EMA, or actually 3 EMAs, in order to create a killer 5 minute scalping strategy. Now, this particular 5 minute EMA strategy is all about the short term, because it’s only designed for 5 minute time periods. This is what most traders would refer to as scalping, the practice of placing a large quantity of small trades in order to make a profit, instead of placing just a few larger trades.
As can be seen in the most recent video, Andrew explains how to use 3 EMA lines, along with some other aspects, in order to make a profitable scalping strategy. Now, we are not going to explain it all word for word, because that’s what the video is for. It’s a lot easier to understand this 5 minute EMA strategy when you can see Andrew doing it all first hand, so we would definitely recommend watching it. Just so you know, this is by far one of the most profitable Forex scalping strategies that uses exponential moving averages.
Here is a little lowdown of how Andrew uses this 3x EMA strategy to place scalping trades with foreign exchange currency pairs.
- Place 3 exponential moving average lines (clearly explained in the embedded trading video).
- Adjust the settings according to Andy’s instructions.
- Wait for the proper conditions, as outlined.
- Wait for the first candle to touch the EMA, and count 5 candlesticks back.
- Exit the trade at the next support for sell and at the next resistance if you placed a buy order.
This might sound a little complicated, but once you get the hang of it, it’s actually quite easy to master. This is just a short 15 minute tutorial video, but Andy does clearly explain how to use the 3x 5 minute EMA strategy to make consistent profits all day long. We would absolutely recommend watching it through from front to back, as it will teach you a lot of good Forex trading methods and tips.
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The 5 Minute EMA Forex Strategy – Final Thoughts
Folks, the bottom line here is that Andy’s 5 minute EMA strategy for Forex scalping is simply one of the very best around. It allows you to place a large amount of trades, all with small investments, and make good money doing so. Scalping is a very popular way of trading, and using exponential moving averages makes it much more reliable and profitable.
Now, do keep in mind that this was only a short crash course. However, if you would like to find out more about Forex scalping and EMA strategies, you should definitely check out the Income Mentor Box Day Trading Academy. This is a full scale day trading school that has the potential to turn you into a profitable and professional day trader.