Using Exponential Moving Average
- When an EMA rises, trade that market from the long side. Buy when prices dip near or slightly below the moving average. Once you are long, place a protective stop below the latest minor low and move the stop to the break-even point as soon as prices close above their EMA.
- When the EMA falls, trade that market from the short side. Sell short when prices rally toward or slightly above the EMA, and place a protective stop above the latest minor high. Lower that stop to the breakeven point as soon as prices close below their EMA.
- When the EMA goes flat and only wiggles a little, it identifies an aimless, trendless market. Do not trade using a trend-following method.