Often times this type of trading setup can lead to explosive trades that never look back. However, the downside to this trading approach is that you will get fewer trading setups. Instead of using a bar that closes above/below the 9-period EMA, we can wait for the entire bar to be encompassed between the 9-EMA and 30-WMA. If we add a better entry filter, we can gain an extra edge. “How can we improve the 9 and 30 EMA trading strategy?” This is a key principle that makes this MA strategy work. The combination of the exponential moving average and the weighted moving average gives us a wider spread between the two MAs. Now, here is a powerful trading secret about the types of moving averages used in this strategy. It all depends on your preferred time frame. You can use this method for short-term trading, medium-term trading and long-term trading. The 9 and 30 moving average strategy is a versatile trading strategy that can be used in ways you never thought possible. Moving forward, we’ll teach you how to implement more advanced trading concepts along with the 9 and 30 EMA trading strategy.ĩ and 30 EMA Trading Strategy – Advanced Concepts Note* Avoid using the 9/30 trading setup in flat markets. The edge comes from trading in the direction of the prevailing trend.Īfter you have a moving average crossover and a strong trend emerges from it, that’s when you want to use this strategy. In and of itself the “trigger bar” used to enter our trades doesn’t give us a trading edge. Conversely, the flatter the two moving averages are, the weaker the trend is. ![]() The bigger the gap between the 9 EMA and 30 WMA and the steeper the angle of the 2 moving average is, the stronger the trend is. The strength of the trend can also be measured via the space created between the two moving averages and the angle of the moving averages. The bearish trend is defined when the 9 EMA is below the 30 WMA The bullish trend is defined when the 9 EMA is above the 30 WMA The trend can be defined via the two moving averages as follows: In this regard, the best time to use the 9/30 trading strategy is when we have established a trend. The 9/30 trading method is a type of trend following strategy that seeks to enter the trade on pullbacks. You got to keep riding the trend until a reversal happens. You don’t have to guess a possible take profit level. This exit moving average strategy has two benefits: ![]() It’s easy to exit these types of trades via a trailing stop loss below the 30 WMA. This buffer will allow your stop loss to survive during false breakouts. Please note that the lower the time frame used the more price whipsaws you’re going to experience.Īs a trading trick to avoid being caught in a whipsaw trade, make sure you add an extra buffer to your stop loss. “Place your stops at a point that, if reached, will reasonably indicate that the trade is wrong, not at a point determined primarily by the maximum dollar amount you are willing to lose.” Here is a little bit of trading wisdom from hedge fund billionaire Bruce Kovner: Alternatively, for a more conservative approach, you can hide your protective stop loss below the 30-periods WMA. So, let’s talk about the stop loss and take profit strategy.For the stop-loss strategy, you can use the trigger bar high/low for reference.įor example, if you have a buy trade signal, you hide your protective stop loss below the low of the trigger bar. No matter how simple this trading strategy is, you need to have a set of trading rules before you use it. In this section, we’re going to teach you how to effectively trade with the 9/30 EMA strategy. So, you can also use chart patterns to fine-tune your entry. Like with many trading strategies we present, you can always use different “flavors” to get into a trade. The filter for the 9/30 trading setup can be summarized into a three-step process. The 9 and 30 EMA trading strategy seeks to take advantage of the blank space created between the two moving averages. In this case, the 9-EMA is our short-term moving average, while the 30-EMA is out long-term moving average. Originally, the 9/30 trading setup was developed by Mike Burns and involves using a combination of two moving averages:ĩ-period Exponential Moving Average (EMA) ![]() Note* the bar that closes below the 9-EMA needs to remain above the 30-WMA for this setup to be valid. Place a buy limit order above the high of the trigger bar. The first bar that closes below the 9-EMA will be used as the trigger bar for the buy setup. The two moving averages need to be apart from each other. These are the rules for a long trade signal:ĩ-period EMA must be above the 30-periods WMA.
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