Fixed time trades gain such popularity because they are considered to be relatively easy. But to earn profits, you need a good strategy that will help you in identifying the best entry points. Today’s strategy is built on two indicators that are called the Average Directional Movement Index and the Exponential Moving Average.
Key Takeaways🔑
| →The Average Directional Movement Index (ADX) and the Exponential Moving Average (EMA) can be combined to create a strategy for Fixed Time Trading. |
| →The EMA indicator reflects the price average over a set period while the ADX indicates the strength of a trend. |
| →Applying these indicators, one can identify potential entry points for UP and DOWN trades. |
| →No strategy guarantees profit. Proper application and practice can increase the potential for successful trades. |
Contents
Two standard indicators in one strategy
The strategy I will describe today combines two indicators. To use it, set the chart for the timeframe of 1 minute and the expiry period for 60 seconds.
Exponential Moving Average
You add indicators by clicking on the indicator feature icon and then the name of the required tool. The Exponential Moving Average, EMA, in short, will be visible on the price chart. The period for this strategy has to be set for 28. You may choose to change the thickness and the color of the indicator’s line if this is what will make the chart more transparent for you.
Average Directional Movement Index
The indicator designed by J. Welles Wilder Jr. is called ADX in short. You will attach it to the chart in the identical way you added the previous one. Change the period (the default period equals 14) for 5. Adjust the color and thickness of the lines according to your preferences.
The ADX indicator is in the form of three lines moving below the price chart. The red line is called ADX and it gives information about the trend’s strength. The blue line is called +DI and the yellow one -DI represents the bullish and bearish fluctuations. They will show the points where to open and close trading positions.
Easy strategy for 60 seconds trades with the EMA and the ADX
When to enter a UP trade
This strategy is based on two indicators and you must wait for several conditions to be met. These are:
- The blue line of the ADX indicator crosses above the yellow line
- The price bar crosses the EMA28 and they continue to appear above it
- The body of the signal candle is bullish
- For a signal to be stronger, the previous candle should also represent the uptrend.
When to enter a DOWN trade
If you want to open a position for the price decrease, you should wait for the following circumstances:
- The blue line of the ADX indicator crosses below the yellow line
- The price bar crosses the line of the EMA and the following candles develop beneath it
- The body of the signal candle is bearish
- For a signal to be stronger, check if the previous candle represents the downtrend.
Pros and Cons of Using ADX and EMA Strategy 👍👎
👍 Pros:
- Combining ADX and EMA provides a comprehensive understanding of the market direction and trend strength.
- Using two indicators helps to identify more reliable trading signals.
- Appropriate for short-term trades like 60-second Fixed Time Trading.
👎 Cons:
- ADX and EMA can produce false signals, especially in a volatile market.
- Requires an understanding of technical analysis and how to interpret these indicators.
- Primarily suited for short-term trading and may not work as well for long-term investment strategies.
Comparison Between ADX and EMA Indicators
| Indicator | Key Functions |
|---|---|
| Exponential Moving Average (EMA) | EMAs are calculated by placing more weight on recent data. It responds more quickly to recent price changes than the Simple Moving Average (SMA). |
| Average Directional Movement Index (ADX) | ADX measures the strength of a trend but not its direction. It can be used along with other indicators to determine the trend direction. |
Summary
The strategy that is based on the EMA and the ADX indicators is designed for opening positions with an expiration time of 60 seconds. To use this strategy the chart has to be set for the period of 1 minute. Then you need to add both indicators to the chart and wait for all the conditions to be fulfilled.
Try 60 seconds strategy now on your Olymp Trade demo account. This is your free training field. Once you are comfortable using the strategy, move to the live account and start dealing with real money. However, keep in mind that this strategy is far from perfect. There is no perfect strategy. You will always face losses, the only thing you can do is minimize it and deal with it when it comes.
You will find the comments section below. Tell us what thoughts about today’s strategy you have. I would be glad to hear from you.
Enjoy trading!
FAQs About Using ADX and EMA Strategy
- Q: Is the ADX and EMA strategy suitable for beginners?
A: While this strategy does require some understanding of technical analysis, with proper study and practice, it can be utilized by traders at all levels. - Q: Can this strategy be used for long-term trading?
A: This strategy is primarily designed for short-term trades such as 60-second Fixed Time Trading. Its effectiveness in long-term trading may vary. - Q: Can I rely solely on this strategy for all my trades?
A: It’s recommended to use multiple strategies and tools, as no single strategy can guarantee successful trades in all market conditions. - Q: Does this strategy ensure profit?
A: No strategy can guarantee profits. It’s crucial to understand that trading always involves risks. - Q: Can the EMA and ADX indicators be used independently?
A: Yes, both indicators can be used independently, but combining them in this strategy provides more information to help identify potential entry points.