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How to use 20 EMA

  • #1
  • First Post: Oct 18, 2011 2:41am Oct 18, 2011 2:41am

How do you guys use the 20 EMA? I read that if the price is above it then it is a bullish signal (and the opposite). What EMAs or SMAs you use and how?
Thanks.

  • #2
  • Oct 18, 2011 5:51am Oct 18, 2011 5:51am
It depends on what time frame you are talking about. A 20 on a 1H chart is approximately a 5 on a 4H and almost a 1Ma on the daily. If you put the 20 on a 4H then it is an 80 on the 1H and a 3+ on a daily. etc. So to answer that question we would need to know the TF. I once read that a poll was taken of traders of the most popular indicator used and the 200 MA won. Problem with that info was it didnt say what TF. If you put a 200 MA on a 1H that is an 8 or 9 on a daily. That one looks good to me and I trade that line often. So what TF do you mean?
  • #3
  • Oct 18, 2011 6:25am Oct 18, 2011 6:25am
The 20 is a 20 no matter what timeframe you are looking at. If you put a 20 on the 5M chart, it is a 20....if you put a 20 on the daily chart, it is a 20. It is a 20 period measure of the timeframe you are looking at.

Put up the 20 and the 80, look back over history and see how it performs. You will answer your own question. The trick is not to look for winners only, but to see where it fails too, then find 1 or 2 ( no more than that) filters to help decipher good breaks of the 20 from bad breaks. I do like the 20 but use it as a simple and not as an exponential. Good luck to you.
Lord, Liar, Lunatic. Those are only 3 options to Christ's diety claim.
  • #4
  • Oct 18, 2011 7:20am Oct 18, 2011 7:20am
Hi,

I am learning trading forex but I am still far from losing the 'L'
But the more I look at the charts the more I like 20 EMA.
What I usually do is to have two TFs - either H1, M15 or H4, H1.
I look on the higher one (let's say H4) and wait for the price to start to return to 20 EMA. When it is close to it I switch to H1 and look for a bounce - which for me is price closing on the opposite side of 20 EMA on the lower time frame.
If the candle looks good I would enter on the close. If I don't like the candle that much but still feel it's worth to give it a try I would put a pending order a couple of peeps above/below the break.
It works quite well. Especially on H4, H1 TF combination.

I hope I explained it clearly but ask away...
  • #5
  • Oct 18, 2011 8:36am Oct 18, 2011 8:36am
I use the 20EMA along with the 60EMA and 100EMA on my intraday charts.

I only use them to keep me out of choppy markets. So when I look to trend trade, I generaly only trade when all of the MA's are aligned and a good distance a part.

This is not a magic bullet, it simply keeps me disciplined. That is my first question to myself when trading, are the MA's aligned? Yes or No, once I have that answer everything else is a matter of execution. This is my permission to trade or not... Does that make sense?
  • #6
  • Oct 18, 2011 8:41am Oct 18, 2011 8:41am
Just to illustrate the method - I am looking to enter short from m15 on EU right now.
Waiting for the bar to close.


... and I went in.
  • #7
  • Oct 18, 2011 9:28am Oct 18, 2011 9:28am
Quoting Giansar
Just to illustrate the method - I am looking to enter short from m15 on EU right now.
Waiting for the bar to close.


... and I went in.
put your chart up mate, and let the guy learn...
  • #8
  • Oct 18, 2011 9:54am Oct 18, 2011 9:54am
I use the 21 EMA (but for all intents and purposes it is the same as a 20 EMA).

However, I use a Fractal 21 in the belief that the 21 is watched by traders on all TFs.

So on H1 I use 21, H4 21 and D1 21. On H4 I use 21, D1 21 and MN1 21.

In pure numbers it approximates on H1 as 21, 75 and 450 whereas on H4 it approximates 21, 113 and 565.

people use a variety of MA settings for a whole variety of reasons. I just decided to be internally consistent and use the 21 from all TFs. I find that even the esoteric settings such as 8 Smoothed Median approximates the 21 (or in your case the 20).

Most all settings will provide you with a trigger mechanism when you do backtesting. Some would have you believe that this is a precise science but it more approximates an art. Precision is not so much important as is accuracy.

Al Brooks book Reading Price Charts Bar by Bar is a great resource on how to use the 20. His website also has 2 downloadable pdfs on how to trade the 20 with just two trade types.
  • #9
  • Oct 18, 2011 10:07am Oct 18, 2011 10:07am
Quoting whatfx
put your chart up mate, and let the guy learn...
Here it is.
Red bar is where I entered (at open of the 15 minute bar).
Blue lines are SL, entry point and TP respectively.
It was actually a really nice setup because we've had at least two additional confirmations besides PA around 20 EMA:
- 38.2 fib pullback from prievious H4 candle
- round number rejection.

SL was 16 pips
TP was 32 pips
So I was out of the market right at the close of the first 15 minute bar.
Attached Image (click to enlarge)
Click to Enlarge Name: eu.gif Size: 61 KB
  • #10
  • Oct 18, 2011 12:56pm Oct 18, 2011 12:56pm
Another way to enter I found profitable is to look for momentum candles forming near or across 20 EMA.
Here is an example of a trade I took today on GU - the candle is a little long +100 pips and it is a little late in session but I couldn't resist the bounce off the round number.
We'll see how it plays out. I'm learning after all.
Attached Image (click to enlarge)
Click to Enlarge Name: gu.gif Size: 8 KB
  • #11
  • Oct 18, 2011 1:35pm Oct 18, 2011 1:35pm
In case you are a beginner, I strongly recommend you forget what an EMA is.

There are some advanced techniques, with lots of filtering and some weird interpretation of a moving averages, not worth it.

Disregard ALL strategies that have loose and illusionary entries. It has to be something very clrear (where a moving averages cross is not).

Go to your folder and delete the moving averages.mq4.


No sarcasm. I don't really have much time to do pm on FF, but I'd love to write you one, if you want.
I found a penny today. That's +100 pips for me.
  • #12
  • Edited 2:27pm Oct 18, 2011 1:46pm | Edited 2:27pm
In the very beginning I played with a lot of strategies involving MA crossing but have never been able to get any of them to work long term.
In range they would ruin your account.
In trend they would give signals late necessitating large stop losses or waiting for pullback. Multiple timeframe seemed to work a little better but I still felt it's not for me.
Then again - there are people that claim that they use MA crosses and are very profitable with them.


EDIT:
Well, I guess I should have consulted my GU trade with Germany And France
  • #13
  • Oct 19, 2011 8:38am Oct 19, 2011 8:38am
Not speaking of crosses (They, like everybody said, will tear you down in times of range and create late entries in times of trending), I use the 20 EMA daily. The 20 has been my bread and butter for a very long time. I've used variations and always come right back to it. Pop one up on a 4 hour chart and you'll see how powerful they are. Just watch the price action in these areas and when you see a reversal pattern at the 20, trade it.

Study that for as long as I have and you won't be disappointed.
I dream, therefore I become.
  • #14
  • Oct 19, 2011 9:29am Oct 19, 2011 9:29am
Thanks to the thread starter for such a simple question.

I have read Al Brooks book more than once ( understatement ), where he basically describes price action Bar by Bar, all of this on a 5min S&P e-Mini chart.

a) my months long trial of doing the same on eurusd failed, as I noticed that price behaves more erratically in FX than on a major US Index ( all Futures traders will agree, or see rasczekfx for comments on that. ). Apart from that, I noticed that FX having the stupid Sunday start times makes all a bit complicated. I would suggest using a broker that has the US daily close time at 05:00 p.m. EST.

.....or else use a 21 ema instead.

b) like mike w I noticed that the 20 ema ( or 21 ema ) is really excellent as a monitoring tool on the 4h and daily. There are even some commercial courses or mentors like Chris Capre using this as their starting point for learning about price action. But you can learn that for free in the J16 thread, and screentime is just that, screentime.

Whatever you do, I would stay away from simple cross ema ideas. They CAN be some form of dynamic support / resistance for experienced traders, but they can do more harm than good in the beginning.

Best regards & good luck !


______________
michael
Be like water.
  • #15
  • Oct 24, 2011 2:23am Oct 24, 2011 2:23am
Thanks for all of the answers.. from reading all of your opinions I realize that there is not just one answer regarding the use of the 20 MA. I understand that it is just an indicator and it meant to help me in trading.
I think that the reason some indicators work is just because traders use them. Do you really believe that the markets has to follow certain indicators? I believe its more psychological than scientific.
By the way I use the same indicators for all TF.
  • #16
  • Jun 27, 2013 11:04am Jun 27, 2013 11:04am
I know this is an old thread but I think it is the right place to ask what I want to know!

How actually the EMA are identified? Is it built in the MT4?
How can I say that this is 20 EMA or so ?

http://forums.babypips.com/attachmen...9&d=1372319227

The pair has been below the EMA 20 and so far four candles close above the EMA 20.
How the above sentence is justified? Is it the yellow line? How it has been drawn?
Can anyone explain!
  • #17
  • Jun 27, 2013 11:32am Jun 27, 2013 11:32am
Quoting Red Herring
I know this is an old thread but I think it is the right place to ask what I want to know! How actually the EMA are identified? Is it built in the MT4? How can I say that this is 20 EMA or so ? {image} The pair has been below the EMA 20 and so far four candles close above the EMA 20. How the above sentence is justified? Is it the yellow line? How it has been drawn? Can anyone explain!
First, I have no problem replying to a post in an "old" thread. I never understood the old thread taboo that pervades so many forums on the web.

Second, I'm guessing that you posted someone else's chart. The thin yellow line is most likely the 20 EMA. In MT4, go to your Navigator pane, Indicators folder, and drag and drap the Moving Averages file onto your chart. Select Period: 20, MA method: Exponential, and Apply to: Close. In the chart you posted, 3 upward completed candles (white) and 1 downward completed candle (red) have closed above the thin yellow line. Remember, the last candle is still forming so we cannot truly say where it has closed in terms of completion.
An ounce of profitable logic is worth a pound of efficient code.
  • #18
  • Jul 1, 2013 7:12am Jul 1, 2013 7:12am
Quoting RJo
{quote} First, I have no problem replying to a post in an "old" thread. I never understood the old thread taboo that pervades so many forums on the web. Second, I'm guessing that you posted someone else's chart. The thin yellow line is most likely the 20 EMA. In MT4, go to your Navigator pane, Indicators folder, and drag and drap the Moving Averages file onto your chart. Select Period: 20, MA method: Exponential, and Apply to: Close. In the chart you posted, 3 upward completed candles (white) and 1 downward completed candle (red) have closed above...
Yes it is someone else's chart as I do not know how to draw EMA
Thanks for your reply and showing me the way to draw it!
Regards
  • #19
  • Feb 13, 2017 7:19am Feb 13, 2017 7:19am
I use the 20EMA in my trading as well. For me, it separates the chart into a buy zone and a sell zone which influences my trading bias.
  • #20
  • May 6, 2017 10:06pm May 6, 2017 10:06pm
Quoting nanningbob
It depends on what time frame you are talking about. A 20 on a 1H chart is approximately a 5 on a 4H and almost a 1Ma on the daily. If you put the 20 on a 4H then it is an 80 on the 1H and a 3+ on a daily. etc. So to answer that question we would need to know the TF. I once read that a poll was taken of traders of the most popular indicator used and the 200 MA won. Problem with that info was it didnt say what TF. If you put a 200 MA on a 1H that is an 8 or 9 on a daily. That one looks good to me and I trade that line often. So what TF do you mean?...
Hello, I'm just trying to understand the equivalence of means between different time frames, and I read you in this post and i guess that you understand the concept, I would appreciate it if you can explain for example how the EMA 34 in 4H, its equivalent to "x" in 5M , 1H. regards
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