Monday, August 21, 2017

Range Trading Strategy Using 200 EMA

December 6, 2013 by  
Filed under Forex FAQ & Latest Post


In today forex faq, we have one question from one of our fellow traders asking me regarding the 200 EMA.

Below is the question:

Good day sir.

I love your easy approach method and how you reveal your strategy step by step. My question is in regard to the 200 EMA flat with no gradient on 15m and 5m time frame.

How do we benefit and make profits from it with indicators like MACD and STOCHASTIC. I already watched one video done by you on RANGE TRADING without 200 EMA, I love to use the 200 EMA on my chart.

Sir, you know traders lose countless times due to inability to identify range or sideways market movement. So please do another one with 200 EMA flat price jumping up and down clustering the 200 EMA.I pray for u and know god will bless you -amen.

From the question above, it looks like you wanted me to show you how to trade the range strategy using the 200 EMA and Stochastic/MACD. Therefore in this post, I am going to show you how to do it.

First of all, when you plot the 200 EMA and it is flat with no gradient, this is an indication that the market is in consolidation. The best time to use the range trading strategy is when the market is in consolidation.

However the amount of profits you can make per trade depends on the time frame that you are trading in. If you apply this strategy on the 15 minutes chart, the profits that you are making is around 20 to 35 pips. If you apply it to the hourly chart, the profits will be around 40 to 60 pips. The higher the time frame, the more profits you will make.

To trade this strategy, you will make use of the 200 EMA and the Stochastic with setting of 5,3,3

Step 1: Wait for the 200 EMA to be flat

Step 2: Wait for the stochastic to go overbought or oversold

Step 3: Enter a LONG trade when the stochastic is oversold, Enter a SHORT trade when the stochastic is overbought.

Step 4: Exit your position once the stochastic hits the opposite zone

Things to note

When you are planning to enter a LONG trade, your price must be below the 200 EMA.

When you are planning to enter a SHORT trade, your price must be above the 200 EMA.

forex range trading strategy

Do try this strategy out on your demo account and you will see how it works.

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