One of my friends has started trading FOREX with triple Exponential Moving Averages (EMA) crossovers. He came upon the method from Yeo Keong Hee’s book, Secrets of FOREX Millionaires. I have always been interested in trading systems and it is rare that books talk about them. Most books would only talk about indicators and trading psychology.
I remember one of the New Market Wizards mentioned that moving averages can make a profitable trading system if coupled with good money management and position sizing techniques. It may seem too simple for most but who says trading has to be complicated.
Hence, out of curiosity, I borrowed my friend’s book and explored.
The parameters for the 3 EMAs recommended are EMA 5, EMA 20 and EMA 50. EMA 5 being the fastest and most responsive line and EMA 50 being the slowest and least responsive line.
There are basically 3 rules for entering long/short trades. Read more…