Professional traders widely used the 100 days EMA and 200 days EMA to trade the different pairs in the forex industry. When the 100 days 100 day EMA crosses above the 200 days EMA we consider it “bullish cross over” and when the 100 days EMA crosses below the 200 days EMA we consider it “bearish cross over”. In this advanced trading strategy, the professional trader uses the two EMA as the dynamic support and resistance level. When the price is trading above the two EMA they only look for buying opportunity on the contrary they look for selling opportunity when the price is traded well below the two EMA.
Let’s see how the professional use the 100 days and 200-day exponential moving average to trade “EURUSD pair.”
Figure: Advanced EMA trading strategy for the long term traders
After the bullish cross over in the exponential moving average if the 100-day exponential moving average diverge away from the 200-day moving average we consider that the new uptrend is gaining strong momentum. In the above figure, traders wait patiently for the price to breach the “100- day exponential moving average”. If the price crosses below the 100 days EMA, they patiently and see if the price can manage to make decent bounce from the 200 days EMA. When the price bounces from the 200-day EMA and breaches the 100 days EMA from below, trader look for buying opportunity in the market. In the above figure, the price nicely bounced from the 200-day exponential moving and closed well above the 100 days EMA with a “bullish candlestick”. Professional traders went long in the next opening of the candlestick.
There are a number of ways that “professional trader” of the easymarkets use, to set the take profit level in their triggered trade. Most of the time trader uses the most recent key significant resistance level as the take profit zone for a long entry. On the contrary, some processional traders use the Elliot wave theory to ride along with the trend. In general, there are 5 basic waves in the “Elliot wave theory”. Among the 5 wave, 1, 3 and wave are known as the “motive wave” whereas 2 and 4 acts as the “corrective wave”. Professional traders tend to carry their trade till the end of a 5th wave of the Elliot wave theory. On the contrary, those who prefer EMA trading give more emphasize on the-the 100 and 200day EMA. They tend to carry their trade as long as the two moving average kept diverging away from each other. After a bullish cross over, divergent in the moving average resembles significant trend strength. With the falling steam in the upward momentum, the moving average starts coming close to one another. With the bearish crossover in action, some professional traders exit their long trade. Though the EMA trading strategy is the very profitable trading system but it’s highly advised not to risk more than “2% of the trading capital” in order to avoid the significant amount of capital loss.