Do you often rely on the EMA strategy for intraday trading? But are you using the right strategy for EMA? Are you aware of the best EMA for intraday trading?
If you are not getting a perfect result on using the EMA strategy then might be you are not using it correctly.
So, let’s learn how to use the exponential moving average and what is the best setting for the indicator for day trading.
Best EMA Strategy for Intraday Trading
Which indicator is best for intraday trading? The answer for this is known to all, but how to use it proficiently is the biggest challenge for traders especially beginners.
To ease things for you here is the best EMA strategy for intraday trading.
EMA being the lagging indicator tells you a lot about the market condition and trend. The indicator is used to determine the trend and further in making a decision for entry and exit points.
It gives more weightage to the recent data and is calculated using the closing price of the latest time period.
Now the time period!
What time period is the best for EMA?
In general, the EMA is set at 9 by default. This is good for the short term, but most intraday traders pick the value of 8 or 20 to get a better interpretation of price information and to make trade decisions.
Here the price trending above the moving average gives the bullish signal. On the other hand, the price trend below the EMA line creates an opportunity for short-selling.
Let’s see how EMA works?
Here to cite an example, 20 days EMA is chosen to do an analysis of DLF stock.
When the moving average is below price then it gives the clear signal to ‘Buy’.
On the other hand, 20 period EMA above stock price gives the signal, that the is about to move to downwards and thus provides a ‘Sell’ signal.
For better sensitivity, you can pick the fast-moving average of less time period, 8 or less for intraday trading.
But does this indicator gives you the signal for the consolidation phase?
For this check another image below:
When the EMA 20 is flat, then it gives a clear indication of the consolidated phase, and hence it is better not to take any kind of decision at this point in time.