Everyone has a trading strategy, at least should have, no matter if it is a scalping or a long term we, as traders, always need to stick to that saying: plan your trade, trade your plan. So here is one of the strategies that I have been using in my forex endeavour. I call it: EMA touch and go.

It is pretty basic and works based on the touch of the 5 EMA on a hourly chart and it is most effective in trending pairs, since it is a “follow the trend” strategy.

You will need the following tools to put it into work:

- Hourly chart of a trending pair (no matter the direction)
- 5 EMA (red line in my charts)
- 8 EMA (blue line in my charts)
- 21 EMA (green line in my charts)

So, what’s the plan?

If the pair is trending up and the price action is above the 21 EMA, we will wait for a touch or a close near the hourly 5 EMA to enter a buy position, as shown by the black arrows in the chart below:

The same plan can be applied to the down side: if the pair is trending down and price action is below the 21 EMA, we will wait for a touch or a close near the 5 EMA to enter a sell position, as shown by the black arrows in the chart below:

When not to use it

First thing you should check is the distance between the 5 and 8 EMA. If it is too thin or if the
EMAs are about to cross, do not open any position. Wait for the market to dictate the intraday
trend and then follow the trend. This usually happens in low volatility periods and before market
opening. The chart below illustrates this kind of situation.

The plan is quite simple and I will not suggest the distance of your stop loss or an amount of
pips to close the position when in profit. Each of us has a different risk tolerance, hence manage
your risk according to your money management strategy. The only thing I would like to suggest
is a risk reward ratio of 1:2, i.e. if you have a 10 pips stop loss set your limit to 20 pips.

Just all kinds of moving averages, the Exponential Moving Average (EMA), represents levels of
support and resistance and, from time to time, price action gets a rebound to the opposite side
of the trend. To avoid being stopped out when using this strategy mark support/resistance levels
and remember: do not buy at resistance and do not sell at support. Basic, I know, but every
trader has already made that mistake.

The EMA touch by price action gives us the opportunity to enter the trade in a retracement.

I also have used it on longer term charts and, for those who have the discipline and patience,
this strategy can be very useful.

If you like this strategy, take a time to study and back test it the put into action in your demo
account for some time before applying it to your live account.

Hope you profit from this one.

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