This is the second article in our EMA series. The EMA was designed to smooth out the effects of price volatility and create a clearer picture of changing price trends.

Traders use an EMA, sometimes in concert with another EMA for a different period, to signal confirmation of a change in price behavior. The benefit of the EMA indicator is its visual simplicity.

Traders can quickly assess the prevailing trend of price behavior from the direction of the EMA.

Care must be taken since the EMA is a lagging indicator and may not adjust rapidly to volatility in the market. The EMA indicator will respond more rapidly than an SMA with similar settings since recent prices are given more weight.

False signals will prevail if an EMA is used in a ranging or sideways trending market, especially one with a short setting. The key points of reference are when the EMA crosses over the pricing candlesticks or another EMA.

The EMA (5) And EMA (20) Crossover Trading Strategy

Skill in interpreting and understanding EMA alerts must be developed over time, and complementing the EMA tool with another indicator is always recommended for further confirmation of potential trend changes. In the next article on the EMA indicator, we will put all of this information together to illustrate a simple trading system using EMA analysis.

10 Pips A Day Forex Trading Strategy

Various technical strategies based on crossovers explained. Trading Foreign Exchange on margin carries a high level of risk and may not be suitable for all investors.

The possibility exists that you could lose more than your initial deposit. The high degree of leverage can work against you as well as for you.

#3 The Best of EMA Crosses on S/R | Forex Strategies & Systems Revealed

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