Moving average indicator (MOVING AVERAGE). EMA Indicator - Description and Application EMA Indicator Parameters
The area of \u200b\u200bits application is so wide that it has become a tool for many speculators around the world. If you are starting training to trading with technical analysis, then as a rule, the first tool that meet is EMA.
What to say if in the Meta Trader 4 trader 4 in templates there are trading strategies on this indicator, since the most famous techies apply to it.
Trading on large only with the lead broker
The EMA indicator is one of the types of moving average, and if we speak in traders, then this is one of the types of moving average. It is an exponential moving average, and unlike the usual moving average when calculating more data on the last bars are taken into account.
The principle of building line is very simple, the price is taken for a certain amount of candles (time period) and is divided by the amount of candles. Thus, we can see the average price value without any oscillations, as it happens on the chart.
Download a ready-made pattern on a moving average -
EMA is calculated by almost the same formula as a moving average, but the share of recent closing prices is added to the usual average price, therefore, in contrast to the usual moving average EMA, it has a smaller delay effect and discloses the trend picture more believable.
The script is embedded in the Meta Trader 4 trading platform by default, however, almost all terminal developers set this indicator into their applications. To add a schedule tool to enter the "Navigator" panel Next, open the indicators section and go to the Trend subsection.
Setting the EMA indicator.
Find moving average on the list and drag it to the schedule with the price. You will appear in front of you in which you want to change the type of moving average with Simple on Exponential. It is also necessary to set the EMA period, simply speaking, the number of candles, on the basis of which the exponential moving average will be calculated.
In addition to the usual setting of the period, you can move the indicator line to a certain number of bars. Such a simple feature helps to work with an indicator from an extraordinary side. An example of setting the indicator you can see in the picture below:
And now let's talk about the method of applying the script. The most popular way, which is described in dozens of trading textbooks is breaking through the price of Exponential Moving Average. If we talk about signals, open a purchase position if the price crossed EMA from the bottom up, for sale if the price crossed EMA from top to bottom.
This signal is determined by the fact that the price has changed the average value, which means that a new trend originated on the market. An example of a purchase and sale entry look at the picture below:
The second area of \u200b\u200bapplication is an entrance to a position based on the intersection of two or more EMA indicators with different periods of each other. As a rule, traders take a slow and fast sliding for example with a period of 100 and 21.
Fast sliding shows a change in the trend for a shorter period of time, and slow smoothes minor price deviations and shows the global trend direction.
When crossing two lines (trends), enter the market. To be more accurate, open a purchase position. If fast Exponential Moving Average crosses the slow EMA from the bottom up. The sale signal opens, if fast EMA crosses slow down from top to bottom. An example of an input based on signals can be seen in the picture below:
You should not forget that often the moving average acts as support with a bullish trend and as a resistance with a bearish. Such a phenomenon is often noticeable when breaking through the EXPONENTIAL MOVING AVERAGE, after which the price is returned and repelled with the new force. However, EMA with a big period can also act as a support or resistance line.
Signals with this approach are very simple. If on a bullish trend, the price rolled back and touched support, then enter a position on the purchase. If the price of a bear trend rolled back from his course and touched the resistance, we enter a position for sale. An example can be seen in the picture below:
In addition to conventional purchases signals, the script is used as a trend filter, and to be more accurate - definitions. It is considered if the price is over its average value in the market reigns by bullish trend. When the price is under a sliding, the bovine trend has developed on the market. EMA is taken to determine the trend with large values, for example, the most popular period for these purposes 200.
Some traders also take into account the angle of inclination of the indicator line, if the angle is very cool it may mean that the market is a strong price burst. An ideal trend is assumed if the line is not under a highly steep angle. An example can be seen in the picture:
When the nearest local minimum or maximum is located far traders try to set their stop orders for the line of the indicator.
If we talk about setting up, then it is worth it to this process very responsibly. If you work on low time frames, you can use EMA with a short period, when working on time and above, the periods are increased. If we talk about the disadvantages of the script, then its weak place is a protracted flask.
In the FLET, the price crosses the line repeatedly in different directions, and traders of these signals often catch the stop orders. In order for this to prevent I recommend not to use the indicator alone.
EMA indicator is one of the four moving averages used to assess the status of the market by exchange traders.
Fully abbreviation is decrypted as an Exponential Moving Average or Exponential Molding Medium.
Basics of building EMA
The calculation of the indicator is carried out according to the following formula:
EMA (T) \u003d EMA (T-1) + 2 * (P (T) - EMA (T-1))
The formula is decrypted:
- EMA (T) denotes the exhibitor in the current period;
- EMA (T-1) is the same indicator in the previous period;
- P (T) - the cost of closing the session.
These calculations allow you to predict the direction of price fluctuations right now.
The difference between EMA from other moving averages
If we compare SMA (simple sliding), WMA (weighted sliding) and EMA among themselves in terms of prediction accuracy, you can see the following picture.
On black graphics displays EMA, WMA - blue and SMA - red.
It can be seen that the exponential curve responds to changes earlier than a simple indicator, but the worse than weighted notes sharp ups and failures on the schedule.
What is a period
An important point when setting up the indicator is the correct selection of the period and timeframe.
The period is the number of candles that are taken into account when counting statistics. EMA 20 will be calculated twenty-last candles, EMA 1000 - one thousand.
The main difference between EMA from all other sliding is a different "weight" of candles depending on time. The greatest weight will have the last quarter, the smallest is the first.
Setting the period sets the efficiency of the reaction of the indicator to future changes in quotations.
There are generally accepted designations for each length:
- Up to 25. - fast;
- From 25 to 50 - average;
- From 50 or more - Slow.
Important! If the timeframe is inconsistent and the EMA period will be late and noticeably lie. Too small values \u200b\u200bin essence will be a copy of the schedule of the asset and will not give any useful information.
Using EMA
The indicator can be applied in some cases.
- Determination of the general orientation of the market trend.
- Signal in case of crossing several sliding.
- Evaluation of resistance regions or support.
- The interaction of the indicator with other indicators.
How does this indicator read?
About the future change in the price of the asset signals three traits:
- EMA indicator looks in the direction of the asset;
- The price is slightly higher (on bullish) or below (on a bear market);
- The graph with a smaller period is above / below the indicator with a large period.
It is very important here to properly select the time segment on which the value of the signal in the market will be read. If everything is done correctly, the indicator schedule excellently marks the general levels of resistance / support.
The main disadvantages of working with the EMA indicator
The main disadvantage of the indicator is its reaction time on the break - if earlier the moment of intersection of the EMA price was an explicit signal about turn, today the figure is late, especially with the lateral movement of the market.
The intersection can only be used as a confirmation of the trend, for example, in strategies with dogways.
The serious problem of the indicator is the frequency of false breakdowns.
It is the number of erroneous signals that is the most serious problem of EMA. The accuracy suffers greatly, and when the lateral movement, track the parameter is often meaningless.
The EMA indicator has other disadvantages:
- Weak efficiency in the unstable market;
- The high length of real time before entering the market;
- High risks and money losses during operation without other, faster indicators.
In addition, the statistical indicator itself is very sensitive to the accuracy of the setting.
A small discrepancy when choosing periods and a timeframe will lead to the fact that the indicator will actually be useless, reacting to changes are not exactly or too late.
Combinations of EMA use
So how to use the schedule in practice? One of the main options is to combine four indicators with different levels (for example, 9-13-22-55).
If the EMA with small values \u200b\u200bof the period are above the long, then this indicates a bull market, in the opposite case - about a bearish. The first or second EMA can also be used as a sensor for reversal or pre-shopping.
Important! Third level breaks in the overwhelming majority leads to the fourth breakdown. Consider this with strategies with rates adjustments.
EMA + ADX + MACD
The strategy is used on short-medium distances from 15 minutes to an hour. Two EMA indicators (7-21 for watch frame), ADX 14 and MACD 12-26-9 are used.
Trade entry rules:
- It should be bought when "seven" will take place from the bottom of the twenty-first chart.
- ADX is located in the area 25 or higher.
- MACD is growing.
Important! MACD is the most important indicator of control. If it is consolidated, then the combination trade is better suspended.
Exit from the trad is carried out when EMA 7 crosses EMA 21 back.
EMA + WMA + RSI
Here, two sliding are used to form a channel, determining the trend force and the output point in the current market.
The combination should be installed on the half-hour or clock time section: due to the nature of the sliding curves at a short distance, the indicator will give too many false signals.
To the market must be included with the conjugation of a channel or any intersection of the WMA schedule if RSI is above fifty. The signal is enhanced when a short WMA with growth / decline crosses long.
Strategy "Caesar" (EMA + Advadx)
A simple and powerful strategy using only two indicators allows you to work on long timeframes.
For Caesar, EMA is needed with a period of 21 and Advadx with levels 20 and 50.
The purchase entrance is carried out when the following signals are triggered:
- The closure of the candle occurs above the average sliding.
- Histogram Advadx demonstrates growth.
- Before lifting, Advadx signals are below 20 for some time.
The matching of three signals is a favorable point for making a deal. The sales signal will be closing the bar below EMA or the beginning of the advadx downturn.
The strategy is highlighted by stability with a monthly profit of about two to three percent. An important point is the entrance to the market while the coincidence of all three signals.
Trade strategy with one EMA
Despite the high risk of error when using only one indicator, strategies for solo-EMA exist.
All of them are based on the use of two charts, fast and slow. The signal for purchase or sale is their intersection.
So, for example, it looks like a strategy for a combination of EMA 15 and 200:
- The price of an asset is above graph 200.
- The EMA indicator 15 has just crossed the line 200 and continues to move.
- Wait until the chart 15 falls below 200, completing the loop.
- Open a long position when the price will touch 15 EMA.
For the sale of graphs should take a mirror position: the price below, the loop goes down, the short position opens.
The most prominent disadvantage of trading only on sliding direct is the large amount of false breakdowns.
The EMA indicator itself is not the standard of accuracy, in the rapid mode, which is used to react to market fluctuations, the number of errors increases significantly.
The fact that sliding is a delayed indicator, does not allow the trader to fully work on the market turns.
"Clean" EMA signal is suitable for noticeable and strong fluctuations, but mixed combinations will be much better fit for such cases.
Conclusion
EMA is one of the most famous and used indicators during binary options. Its simplicity and accuracy in determining the boundaries of the market make moving directly indispensable trader tool when evaluating turning / breakdown points.
On the other hand, the low accuracy of the indicator can lead an inexperienced trader to serious losses. To control it is desirable to use indicators on other principles, like AXD or MACD.
In order to calculate the arithmetic average of any numeric sequence, various formulas are applied. The overwhelming majority of them are special cases of the general formula, which is a sum of the works of all numbers and the corresponding coefficients divided into numerical significance. Usually a certain relationship is established between the coefficients of adjacent numbers in the sequence, for example, indicator EMA They differ in about 2.7 times.
This dependence of the exponential is called 2.7 is the number of Euler (denoted by the letter E), which is the basis of the exhibitory (this is an indicative function, the derivative of which is equal to itself). Therefore, the indicator considered by us is called an exponential moving average - EMA (from Exponential Moving Average).
It is a special case of an analysis method called averaging, and a MOVING AVERAGE indicator, which is the analytical component of any MT trading platform. Therefore, the Exponential Moving Average will not need to download. It is in the category "Trend" (highlighted by a brown circuit in Fig. 1) and the double click on its name leads to the appearance of a configuration panel - it is necessary to assign the value of Exponential to the "Method" variable.
In this case, the algorithm for calculating the EMA indicator is switched by the formula shown in Fig. 2. Its feature is to use to calculate the current value of the wing of its previous value. The default parameter is equal to double the reverse values \u200b\u200bof the increased value of the 1st period.
In some cases, it is necessary to calculate the exponential average with a different value of P. Then you can, the setting allows you to set the COEF variable any numeric value (Fig. 3). It is exactly the equivalent of the parameter P from the formula.
Such functionality allows you to more accurately adjust the curve indicator moving average EMA under Forex schedule, which allows you to obtain more reliable results of the analysis, and, therefore, and conduct more profitable trading.
Non-standard EMA indicators for forex - what it is
They differ not only to the flexibility of the calculation settings for the EMA indicator formula in MetaTrader, as in the modification described above, but also more convenient for some applications to visualize results. Consider several examples.
Description of the indicator
It occurs in two exponential moving averages, the periods of which are different. Then the algorithm determines which candles there was an intersection of curves of calculated moving and these candles are marked with arrow signals (Fig. 4):
- green - Fast Ema Forex became higher than slow;
- red - Slow Ema Forex has become higher than quick.
The Forex Strategy EMA implemented on this indicator involves the purchase on the green arrow and selling on the red arrow. In this case, it is necessary to use any additional filter of false signals (for example, an oscillator or support / resistance levels).
There are several exponential smoothing over the quotation in it. Thus, a decrease in delay is ensured, which is simply necessary at a distance between the adjacent extremes of quotes of no more than two tens of candles. In this case, the trader appears more profitable to go to the market and get out of it.
Indicator
Its line is drawn by two colors (Fig. 6):
- red - if its successive values \u200b\u200bdecrease;
- green - if its consecutive values \u200b\u200bincrease.
In this case, it is convenient to use Color EMA in forex strategies as a filter:
- if the line is red, then it is advisable to consider sales;
- if the line is green, then it is advisable to consider purchases.
And the color change shifts can be independent trading signals (but they need to filter false):
- with green on red - sale;
- with red on green - buying.
Indicator
It makes accounting for trade volumes that are calculated approximately by summing up several distances between candle prices. After that, the resulting results produce a number of arithmetic operations, as a result of which 3 numeric sequences displayed as curves in the basement window are formed (Fig. 7):
- red demonstrates purchases;
- blue demonstrates sales;
- green is their average.
You can use the EMA AZZX VOLUME indicator:
- if the blue line becomes higher than red, it opens a short and closes a long position;
- if the red line becomes higher blue, then the short position is open and the short position is closed.
Indicators help traders, both beginners and professionals, faster and more effectively analyze the market. Some indicators collect information from the futures market, options, this expands the database that can be used to analyze the market and its forecasting.
The optional market is one of the most popular markets in the financial stage of the world. Where the profit of the trader with one transaction is. And most importantly - get it very simple! For this, it is only necessary to correctly indicate the direction of the future movement of quotations. The main thing is that the price has shifted at least 1 point towards your trading position!
Alternatively, to start familiarizing the optional market, you can highlight BINOMO, to trade in which you can start at all without money on the account using free gift options for broker.
How to install indicators?
In the old MT4 builds, up to the 600th, the installation of the indicators was quite simple, it was necessary to open the root directory of MT4, go to the Indicators folder and copy the file with the code into it. Since 2015, it is necessary to open the terminal to set the indicator, go to "File", "Open the data directory", enter the Root folder MQL, hereinafter - "Indicators" and copy the desired file to this folder. The system will automatically create a closed code that will be used by the trader in operation. Next, you should restart the terminal and the indicator will become available for use. How to add an indicator in MT4 Now you already know, then we will offer some useful indicators.
Optional level indicator for MT4
When trading on the market, it is always very important to clarify the entry point in the transaction, as well as, you need to know the outlet point or the level on which the price will enter the Fleet Range. If you are a novice trader, then the 7 OPLI V40 Lite indicator will help find key points on price charts, real-time.
Download this indicator now and get the opportunity to see the levels at which major players are most likely sitting in strong pulse price movements. We give an example of such an indicator. As can be seen from the screenshot, approximate points for shopping and sales will be displayed. Accordingly, it is necessary to buy cheaper, but to sell more expensive, at the upper indicators.
How does the Market Profile indicator work for MT4?
Part of traders believes that the application of data from the futures market will allow them to trade more successfully on Forex. It is known that data from MT4 is about 1% of all the necessary data, and futures and indicators that read the data on them make it possible to work with 10% of the data.
The Market Profile indicator summarizes the total number of supported futures at each price division. The zone, where the most contracts are written, is the so-called market core, you can trade towards the main trend. There are also false indicators that are not read from the futures market, so it is best to buy a subscription to Cluster Delta for $ 5 per month, these costs will pay repeatedly.
Indicator for MetaTrader4 - Elliota Waves
For a long time, Elliot put forward the theory of the wave movement of the price, according to which all the actions of traders and investors are predictable, the price moves only by the waves and after growth always falls. Now many believe that this technique predicts the price movement itself, but in fact, it predicts behavior and cannot be said for sure, the price will fall or grown, any wave can be interpreted in different ways, 12 similar subtearines. However, once behavior can be predicted, you can predict and price movement.
There are a large number of indicators that predict the third wave of Elliota. This wave gives maximum profits and is the main price movement. Using the Elliott Wave Oscillator indicator, after adjusting the wave 1 and 2, you can predict the end of the wave 3.
Volume indicators for MT4
Volumes in financial markets play a very important role. Price and volume are the main components of the market, in fact, this amount and quality. The Forex market is over-the-counter, so it can only have teak volumes, and their quality depends only on the broadcast of quotations. In different brokers, teak volumes may differ slightly. In fact, they do not show trading volumes, they show the price activity in some time interfer.
From this we can conclude that the volume cannot be seen through MT4, since the programmer can catch only for the number of ticks, another option - the use of indicators from resources such as Cluster Delta, this will allow to see the volume of futures for which you can predict the price of price and Forex.
Indicator open positions
There is statistics on which 95% of traders merge money. If so, then this can be used for yourself, but for this you need to have a Forex Insider indicator, you can download just below if the question arises how to download the indicator in MT4, read the PDF files invested in the archive. Read the recommendations and set this indicator as an advisor to the MT4 terminal. In turning on the work of the expert, you can observe such a picture.
The graph will open the informer where it will be possible to see the positions of the majority in different ways. Those currencies should be trading, where positions are shifted in one direction by 90-100% or 0-10%. Work is against the interest of the majority. The strategy does not establish, the transaction closes when a zone of interest is achieved 40-60%, this indicates a feet of interest.
Support and resistance level indicator for MT4
Most traders know about support and resistance levels. They are used to search for price rebound points to increase the accuracy of the entrance. It is known that heavy miluings can act as support, from 200 to 300. The same role can also be carried out by trend lines, balance lines and other tools, such as Fibonacci levels and Vil Endus.
There is a PowerDynamiteareas indicator, for MT4, it is based on an algorithm based on historical data analysis. It displays support and resistance at the price chart. By default, red lines are zones in which you should sell, and the blue zones are purchases. Stop Loss is placed under the nearest minimum / maximum to protect itself from false breakdowns and kickbacks.
An example of an indicator is shown in the screenshot.
It can be seen from the screen that the purchase and sale zones are rather narrow, and the price zone is very large, therefore trading in such an indicator will be very effective, stop loss is short, and Take profits are 2-3 times more than a possible potential loss.
EMA indicator for MetaTrader4
The standard exponential average sliding indicator is used by traders around the world, as a dynamic support line and "Magnit" for the price, if the Timeframe D1 is used and the average with a period of 200.
Moving averages can be useful to determine the trend, trade with averaging and martingale. The intersection of medium sliding with small periods and with large, indicates a change of short-term trend.
VSA indicator for MT4
The VSA method allows you to analyze the volumes on Forex, search for false trobicals and true reversals. One of the standard MT4, Volumes indicators shows about the same volumes as futures data, however, this is not accurate information, but approximate. It can be used to determine the zones with low volumes, where the price can turn around.
Scalping Indicators in MT4
When working on Forex, a desire often arises to earn more, the scalping helps. The essence of scalping is to take a slight price movement in a large lot and so few dozen times per day. This trading method can bring hundreds percent per month.
With aggressive trading, traders use special indicators. Best of all when scalping, apply standard indicators and advisors to help. The well-known EMA30 indicator can help earn if trading towards the trend that he shows. One unsuccessful trader began to slowly earn, working in this way, it brings him 20% profit per month, he scalps on.
Make a conclusion. Shopping indicators will noticeably facilitate the life of the trader, reduce time on thinking, contribute to finding optimal input and output points, help make money even in the aggressive market.
Sincerely, Alexander Ivanov
In the entire history of financial markets, traders came up with hundreds of indicators intended to identify trends, but the easiest and reliable trend algorithm is still considered an exponential sliding average - EMA.
In essence, eMA indicator Almost no different from, as it also processes the price according to the special formula, after which it displays the result on the schedule.
If you do not go into mathematics, then the discrepancy data can be easily seen with a naked eye on any chart, in particular, it suffices to build EMA and SMA indicators for the same periods of the same prices (for example, according to Open quotes).
As you can see, at the Bear Trend, the exponential Moving Average is most of the time below SMA, and in the process of forming a bull impulse, the EMA indicator is most often located above the usual average price. Of course, from this rule there are exceptions that are especially noticeable in flots.
Such deviations from the norm are explained very simply - in the sidework, the exponential MA responds to oscillations faster, and SMA continues to move inertially towards the previous trend.
Thus, if a trader appreciates accuracy, it is better to work with an EMA indicator, but if there is a need for a rough estimate of the prevailing market moods, it is reasonable to use SMA.
EMA signals
Above, I have already noted that EMA is not better suitable for identifying a trend. Without a doubt, this technique can be considered the most popular and reliable, since the gradual growth of the average price always indicates the strength of the bulls, and the smooth decrease in average values \u200b\u200btells us about the victory of bears.
Moreover, if you look at the markup of the Exponential Moving Average indicator, you can find an interesting regularity:
- If the real price is above the indicator line - the latter always looks up;
- If the current quote is located under EMA - average prices are reduced.
With a simple sliding in this regard, everything is much more complicated, as it continues to grow (fall) even after the start of a serious correction, which in fact may be the beginning of a new trend.
If the speculator does not trust the direction of one EMA indicator, the trend can be sought by intersection of two exponential "moving" with different periods. In this case, it will be possible to eliminate market noise, but the potential entry points of the position begin to be seriously late.
As a rule, similar tactics are used only to identify the prevailing direction of movement, and the signals themselves are found to the position in the position using and methods.
If we talk about large timeframes, the Exponential Moving Average indicator can also be used as dynamic support / resistance.
The just mentioned approach describes Alexander Elder in detail. In particular, the famous Birzhevik considers the current EMA value as a fair price, i.e. She equally suits both bulls and bears.
When the quotation reaches this point of equilibrium, two outages are possible:
- The former force will again be interested in a set of position - in this case a rebound from the EMA indicator will be created;
- Opponents will take advantage of the current situation and intercept the initiative, as a result of which the typical test breakdown will be observed on the chart.
The best method is best working on day and weekly timeframes, but on younger schedules, especially intraday, it is not recommended to use it, because false signals will appear very often.
And the last strategy, in which EMA benefits, involves the construction of a dynamic price channel (or as it is called an envelope).
The design presented above is formed very simply:
- The upper limit is built by adding to the value of the central EMA indicator of a certain number of items;
- The bottom plank is the result of subtraction from the main Ma the same items.
Most often, the channels are used to trade from its borders, which is especially relevant on the flue market, but sometimes the envelope helps filter the trend.
On the figure presented above, we see that a bull trend recognizes the formation, within which the price is above the upper channel of the channel, and the bearish impulse is recognized as reliable only after fixing the price under the envelope.
If the actual quotes are located inside the EMA channel indicator, it is premature to talk about the presence of a pronounced trend.
Thus, despite the elementary formula of the calculation, the exponential moving average becomes indispensable in many technical. Moreover, if you compare the EMA and SMA indicators, the first seems more reliable because it reacts faster to actual price fluctuations.