50, 100, and 200 EMA Forex Trading Strategy
What is the significance of any EMA?
The most important significance of any EMA, such as the 50/100/200 EMA, is it tells you whether you have an uptrend or a downtrend. If price is making Higher Highs above the 50/100/200 EMA, you have an uptrend. If price is making Lower Lows below the 50/100/200 EMA, you have a downtrend. If price is zig-zagging sideways through the 50/100/200 EMA, you have a ranging market with no clear uptrend or downtrend. This information is pretty significant, if you want to trade with the trend as an additional confluence.
Which EMA is best?
Hands down, the 200 EMA is far better than the 50 EMA or the 100 EMA. You should never use any EMA below the 200 EMA, otherwise you really have no clue what you’re doing. In trading, higher time frames and higher EMAs always trump lower time frames and lower EMAs. Do yourself a favor and never use anything below the 200 EMA. As a matter of fact, you should never use anything below the 4 Hour Chart 200 EMA, to be even more specific. Make sure to watch the 200 EMA Forex Trading Strategy video above for more information on this.
What about the 200 SMA versus the 200 EMA?
There isn’t too big of a difference between the 200 SMA and the 200 EMA. Therefore, you can use whichever EMA you prefer. If you have always used the SMA, as opposed to an EMA, you can simply stick with the 200 SMA. The difference is marginal. However, it’s extremely important that you use the 4 Hour Chart version of either the 200 EMA or the 200 SMA, otherwise it will be completely useless. The 200 EMA Forex Trading Strategy video above provides the right settings for the 4 Hour Chart conversion. To know the real trend, you need to use the 200 EMA or the 200 SMA on a higher time frame chart, such as the 4 Hour Chart.
Do we use the 200 EMA in our course?
We actually do not. The truth is that EMAs are for beginners. With experience, you don’t need an EMA to tell you whether you’re in an uptrend, a downtrend, or a ranging market. However, we do highly recommend using another indicator (Pivot Points) with our specific settings, which we disclose in our Forex Mastery Course. It’s the only indicator that every trader should be using. Without Pivot Points, you’re at a disadvantage.