EMA's are a type of moving average that places a greater weight on more recent data points.
8EMA = Exponential Moving Averages of the last 8 candle closing prices.
EMA's adjust with respect to chart time frame.
🧵EMA + VWAP STRATEGY
Every trader has a go-to strategy that works best for them. My trading is all about keeping it simple stupid and revolves around two indicators - Exponential moving averages and vwap.
Here's the strategy that I utilize on nearly 80% of my trades.
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EMA's are a type of moving average that places a greater weight on more recent data points.
8EMA = Exponential Moving Averages of the last 8 candle closing prices.
EMA's adjust with respect to chart time frame.
Volume Weighted Average Price - A key intraday indicator in my trading that offers the true average price based on price & volume.
Calculation: (Price x # of shares traded) / total shares traded
- 8
- 21
- 50
While I do utilize the 50EMA, the 8 & 21 EMA are most important for this strategy. Some people use the 9 and 20 which are essentially the same thing. REMEMBER: EMA'S adjust with respect to time frames.
2. Ema Crossover
3. Pullback/Retracement to the EMA's
4. Higher conviction when EMA's are above vwap for calls and below vwap for puts.
5. Entry off of 8ema taps
An ema crossover signals to me that a trend is forming. I tend to see for a call strategy the trend is stronger when EMA's are above vwap and the same for puts when EMA's are below vwap.
I never add directly into a large red or green candle extended from the EMA's bc with every large move there will always be a pullback/bounce. That's where I like to add.
1. Bearish 8/21 EMA crossover to the downside
2. EMA's below VWAP
3. Retracement to the 8EMA triggers me to add 363p
4. Price action rejects 8EMA
5. Exited for +103% 24 minutes later
As you can see here we get a bullish 8/21 crossover and a pullback to the 8ema. The vwap rejection plummeted the price and the strategy would have failed here.
