Last updated: July 6, 2020

5 EMA and 8 EMA Crossover Forex Swing Trading Strategy

This strategy is basic. It uses 5 EMA and 8 EMA indicators. The principle of this strategy is when the 5 EMA will cross upward the 8 EMA, then the direction of the trend is an uptrend. The trend is a downtrend when the 5 EMA crosses downward the 8 EMA. This system uses a 4-hour and daily timeframe. This is applicable to any currency pairs.

Long Entry:

• 5 EMA must cross the 8 EMA in an upward direction.
• Enter long position at the high of the candlestick that crosses the EMAs.
• Place stop loss at 5 to 10 pips below of the low of the candlestick.

Short Entry:

• 5 EMA must cross the 8 EMA in a downward direction.
• Enter short position at the low of the candlestick that crosses the EMAs.
• Place stop loss at 5 to 10 pips above the high of the candlestick.

Take Profit:

• The reward should be at least 3 times the risk.

Trade Management:

• Trailing stops is a good option for managing the trade. You can move stop loss after 50-80 pips gain for daily and 25-40 pips for 4 hours.
• You can also move the stop loss behind every candlestick that closes.

Advantages:

• This strategy is comprehensive.
• This is great for trending markets.

Disadvantages:

• This strategy is not good during ranging market.
• The stop loss could be high depending on the timeframe. The higher the timeframe, the higher the stop loss. It is recommended that you have to manage the lot sizes to protect the capital.
• The signal can be delayed. It means that the market has already made a big move and there could be a little retracement when you enter.

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