5 EMA Trading Strategy — Intraday
Shared by Shreya
The setup makes our trading more profitable with minor losses and major profits. Let’s know what EMA stands for: “Exponential Moving Average” is a technical chart indicator that tracks the price of a stock/index over time, giving more importance to recent price data. The setup is called 5EMA.
The 5EMA follows the price and forms EMA lines, using a 5-minute time frame. There may be situations where the candles form above or below the lines, meaning we have a deviation.
You can take 3 buy trades or 3 sell trades, or a mix of trades — it all depends on your risk potential. You can define the stop loss for a day according to your risk appetite.
Get Realtime Alerts
5EMA gives many signals and hence it is very difficult to get all the signals at the right time. Even missing or getting a delayed by a minute will make your SL high and hence risk to reward very bad. And for that we at MoneyCapital.Ai have build a real-time alerts for 5EMA buy/sell signal for nifty and bank-nifty.
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For Selling:
We use a 5-minute timeframe for selling stocks, shorting CE or futures, or buying PE with a simple candle pattern. There are two parts to the strategy:
- Alert Candle: To enter into the trade, the candle should close above the 5EMA line, either green or red, without touching the line. This is the alert candle, not a confirmation candle. If the next candle is also completely trading above the 5EMA and has not touched the 5EMA line, then the previous alert candle should be ignored and the new candle should be considered as a new alert candle.
- Activation Candle: Whenever a breakdown occurs, the trade should be taken immediately. That is, whenever the next candle touches the 5EMA line, a short trade should be taken, and the alert candle high will be the stop-loss level. The minimum target should be 1:3 with respect to the stop-loss. The strategy has a 60–70% success rate, but it will often hit stop losses. If you stay with the trend, you can make big profits. The basic principle should be to try to catch the tops, so when you sell at the top and it turns out to be a reversal point, you can get a good profit.
A few Examples:
In the above example, as marked alert candle is over the 5EMA lines, and the next candle touched the 5EMA and become the activation candle. The high of the alert candle is the stop loss and you should minimum plan for 1:3 target and trail strictly after that.
To get realtime notifications, check out this post: https://twitter.com/moneycapitalai/status/1622543747077791745. Use code #happy20 to get 20% discount on your subscription.
For Buying:
For buying, we use 15 minutes time frame. Generally, the buying markets will be slow momentum and high volatility. To enter into the trade, the candle should close below the 5EMA line either it can be red or green candle and the candle high should not touch the line i.e No part of the candle should be touching the 5EMA. This will be our alert candle, If the following candle is also completely below the 5 ema and does not touch the high of the previous alert candle, then the previous alert candle should be ignored, and the subsequent candle should be considered as the new alert candle. Whenever it gives a breakout, immediately we will take that trade. i.e whenever the next candle touches the 5EMA line you should take the long trade, and the alert candle low will be our Stop Loss level. The minimum target you should plan for will be 1:3 and you can trail the profits according to the trend and risk appetite.
To get realtime notifications, check out this post: https://twitter.com/moneycapitalai/status/1622543747077791745. Use code #happy20 to get 20% discount on your subscription.
Some extra conditions:
- We have only 2 indices to trade, but we have many stocks. Some stocks have liquidity and some do not, So you need to be extra careful with targets and stop losses.
- Don’t do overtrading, If the stop loss is being hit more than 3–4 times, just leave it for the day and try again tomorrow.
- Alway’s keep your day stop loss as fixed and stop trading after that.
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Disclaimer: The strategy has been published many times on pos and other youtube channels.
