2 Different Approaches for Using EMA Indicator at Olymp Trade


Using EMA at Olymp Trade

The trading guide for using the Exponential Moving Average (EMA) on the Olymp Trade platform

The moving average is created by calculating an average of closing prices from a given number of candles. There are a few methods of calculating an average. The Simple Moving Average is just a sum of closing prices divided by several given candles. The Exponential Moving Average, on the other hand, is more sophisticated. It also uses a given number of candles (it is EMA period) but the mathematic equation for its calculation is quite different. Well, I do not want to bother you with the formula of calculations. What is important is the fact that the EMA reacts faster to the current market movements. You can observe this by setting up both, the SMA and the EMA with the same period on your chart. Just to compare the two of them.

Setting up the EMA indicator at Olymp Trade

Once you are logged in, you choose the asset and set the Japanese candlesticks chart. Then find the indicators feature and click on it. You will see the EMA between “Trend indicators”. Select it and it will be added to your chart.

How to add EMA to the chart
How to add the EMA to the chart

You can easily change the indicator’s parameters by clicking on the pen icon. Change the period for a higher than 10, to get a more accurate line. You can also modify the color and the width of the indicator.

Adjusting SMA period, color and width
Adjusting SMA period, color, and width

When you want to use two EMAs on one chart, you simply repeat the procedure presented above. Remember to change the color of the second EMA so it will be easy to distinguish them.

Using the EMA14 and the EMA28 in trading at Olymp Trade

Relations between EMA14 and EMA28
Relations between the EMA14 and the EMA28

Trading with two EMAs is to observe the space between the lines and the points of intersection.

Look at the chart above. The EMA14 is moving below the EMA28 and the gap between them widens. Also, the prices are under both indicators. This means a strong downtrend and a signal to open a sell trade. As the space between the lines shrinks, the trend is close to exhaustion.

In the opposite case, when the EMA14 crosses and starts to move above the EMA28, the gap widens and the indicators stay below the prices, we have a strong uptrend. You ought to open a buy position.

You can notice in the example above, that there are times when the indicators run close to each other and stay on the price level. This happens when the market is ranging and it is best to lay low for a time until the trend begins to grow.

Using the EMA30 in trading at Olymp Trade

Price cross above EMA30
Price crosses above the EMA30

The EMA with a period of 30 is also widely used in trading. With its help, you can identify the upcoming trend. Look at the exemplary chart above.

Of course, the most important thing is when to enter the trade. Well, when you see the EMA30 is nearing the prices from the above, and finally, it cuts the candle, you get your point. Here it was a bullish candle and the EMA began to move under the prices so your position should be a long one.

Check out the next chart.

Price cross below EMA30
Price crosses below the EMA30

 

We have the opposite situation here. The EMA30 was moving below the prices, which means that it was the uptrend, but it came to the exhaustion and the indicator cut the bullish candle. Then it runs over the prices. Now is the right moment to place a sell order.

It is really very simple, yet efficient to trade with the EMA. You can identify the trend just by observing the relation of the indicator’s line to the price level. Moreover, when the EMA crosses the candles you will know, the trend reversal is occurring.

I just want to remind you it is a good idea to use the EMA with a period higher than 10. This will strengthen its accuracy and make it useful for long timeframe trading.

Thank you for staying with me to the end. I am aware of the fact, that practice is the best teacher, so go to your Olymp Trade demo account and set the EMA indicators. Try both approaches and decide which one works better for you. I would be glad to hear from you. Write your thoughts in the comments section below.

Enjoy trading!

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Bart Bregman

Full time day trading, and helping out with Olymp Trade wiki in my spare time to create an awesome platform for beginners. I'm a digital nomad that travels the world while working from everywhere!

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