Trading strategy with oscillator ADX and trend indicator EMA is popular among traders in currency markets. It is suitable even for novice to trade. The logic of the ADX + EMA strategy is to trade when the price rolls back from the main trend.
Conditions for using the trading strategy “ADX + EMA”
The trader must connect the following instruments to the price chart to start trading according to the strategy:
- EMA trend indicator with a period of 20.
- ADX oscillator with a period of 14 and levels of 20; 50.
ADX and EMA indicators in the trading room of the broker IQ Option
Any asset on timeframes from 5 minutes to 4 hours is suitable for trading with this strategy. But the optimal time interval is 30 minutes and 1 hour.
Buying / selling by strategy “ADX + EMA”
To correctly determine the trading signal to buy, the Trader needs to wait until the line +D1 (ADX indicator) intersections the improvised level 20 from the bottom up and continues to move above it. The trend strength line should move in the upper area of the indicator scale. EMA should take place under the candles of the price chart at this time. This is a buy signal. Trader can open a long position.
Interpreting a buy signal by strategy
To interpret the signal to sell assets, the trader must wait until the line -D1 (ADX indicator) intersections level 20 upwards and continues moving above it. At this time, the trend strength line should move in the upper area of the indicator scale, and the EMA indicator should move above the candles on the price chart. This is a sell signal. Trader can open a short position.
Interpreting a sell signal by strategy
Attention. The bet of one transaction over 3% of deposit is an unjustified risk.
Basic rules for increasing the efficiency of trading using the strategy “ADX + EMA”
Trader can conclude transactions not only at the moment of forming a trend, but also during all price corrections.
Users should ignore trading signals if the –Dl or + Dl lines of the ADX indicator pass near level 50, even if all other conditions are met.
The strategy “ADX + EMA” is intended for trend trading. During flat, it is better to use another strategy, choose another asset, or refrain from trading.
The article describes all the conditions and rules of the trading strategy “ADX + EMA”. These recommendations will allow even a beginner to quickly and confidently start trading. However, one should not dwell on the achieved knowledge and forget about the risks. Since in trade, you need to constantly learn new instruments, develop and master new strategies. Trade wisely on IQ Option.
NOTE: This article is not an investment advice. Any references to historical price movements or levels is informational and based on external analysis and we do not warranty that any such movements or levels are likely to reoccur in the future.
GENERAL RISK WARNING