Strategy › Best Combination of Indicators: EMA with Momentum Indicator and Tom Demark

Best Combination of Indicators: EMA with Momentum Indicator and Tom Demark

Creating quality indicators from the combination of only four popular trendlines is a really useful tool for traders who are tired of the complicated installations to form a strategy. In this article, you will find the guide to apply this strategy to recognize potential market entering and make a profit.

How to use Combination of EMA with Momentum Indicator and Tom Demark?


Unlike other trading strategies which only applied efficiently on some specific currencies pairs has no limit in choosing the pairs to apply. Besides, the appearance of Tom Demark trendline is the focal point – it shows the current trend in the market (in practical, it must connect at least 3 peaks or 3 nadirs in forming a trend direction) and together with the other indicators, it reveals the signs to enter the market.

The following indicators are required for the chart:
  1. An Exponential moving average EMA (9) with the color Red;
  2. An Exponential moving average EMA (30) with the color Blue;
  3. Indicator Momentum (14): the level is set at 100;
  4. Time Timeframe at (H1) will work the best with this strategy.

Conditions for a buy CALL option::
  1. The price on the market penetrates the trend line of Tom Demark coming downwards from the bottom up;
  2. Momentum stays higher than the set level 100;
  3. The exponential moving average EMA (9) crosses the exponential moving average EMA (30) and stays above.

The intersection of the 2 moving average EMA may happen after the penetration on the trendline Demark.
Demark indicators are useful in analyzing market trends. A Demark trading strategy helps a trader to evaluate the current state of the trend as well and the likely exhaustion point.

Also, to confirm the total breakdown of the trend line and the crossing of the EMAs, traders should enter the market at the opening of a new candle on the given timeframe.

Best Combination of Indicators: EMA with Momentum Indicator and  Tom Demark


If you like this strategy, you might also be interested in this Bollinger Bands Strategy
Conditions for sale PUT option::
  1. The price on the market penetrates the trend line of Tom Demark coming downwards from above.
  2. Momentum stays lower than the set level 100.
  3. The exponential moving average EMA (9) crosses the exponential moving average EMA (30) and stays above.

The intersection of the 2 moving average EMA may happen after the penetration on the trendline Demark.
Once again, it is important to note that the order should only be opened at the opening of a new candle on the given timeframe - in order to confirm the total breakdown of the trend line and the crossing of the EMAs.

Best Combination of Indicators: EMA with Momentum Indicator and  Tom Demark


Important rules when applying this strategy:
  • Traders should open one position at a time for the best control;
  • Only make decisions after the candle of confirmation is totally closed.;
  • All signals must be received after one trading day;
  • The maximum risk for each transaction should not exceed 2% of your total balance;
  • The order should be set expired in a maximum of eight hours.

Pros and cons of the strategy


Pros:
  • Easy to install and follow;
  • Provides a detailed guide to make the decision on buying and selling.

Cons:
  • Requires good emotion control;
  • Takes time to track potential points for ordering.

Conclusion


The Combination strategy is an effective technical strategy equipped with many advantages of simplicity and high-profit ratio. Given such advantages, traders could apply the Combination strategy on different currencies pairs to maximize the benefit. Remember: to remember exactly the signal movements and stick with the mentioned rules are compulsory to success in this hard market.


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