EMA (Exponential Moving Average) and Stochastic are popular technical indicators in the world of trading and investing. EMA, a type of moving average, places more weight on recent price data, providing a smoother trend line and reacting faster to market changes. It's valuable for identifying short-term trends and potential entry/exit points.
Stochastic, on the other hand, assesses a security's closing price relative to its price range over a set period. This indicator helps gauge potential overbought or oversold conditions, aiding traders in predicting reversals or corrections in price trends.
When used together, EMA and Stochastic can provide a comprehensive view of an asset's momentum and potential turning points. EMA highlights the general direction, while Stochastic offers insights into its current strength.
We’ll look at this combined approach with EMA and Stochastic for scalping trading and vfxAlert online trading signals.
https://www.youtube.com/watch?v=fFlikotR2YU
Strategy Characteristics:
- Timeframe: 30 second - M1
- Trading Asset: Any currency pair with medium or high intraday volatility
- Trading Time: All trading sessions
- Expiration: Not less than 3-5 candles working timeframe
Chart Setup:
- EMA 1 - Period = 14; EMA 2- Period = 9
- Stochastic:
- Period %K = 13;
- Period %D = 3;
- Smoothing = 3.
Trading signals:
- CALL Option. Stochastic is above level 20 and its graph is directed upwards and the current candle closes above the moving averages.
- PUT Option. Opposite conditions: Stochastic below level 80, the candle is closed below the middle.
The best moment to open option is when the initial candle closes above or below the moving averages and effectively shifts the Stochastic indicator. It's crucial to monitor the Stochastic indicator, ensuring it exits either the overbought zone (80) or the oversold zone (20). If you miss the signal from the first candle on the M1 chart, it's acceptable to consider entering on the second candle. However, it's recommended to exercise patience and wait for the subsequent signal for a more favorable opportunity.
