5 Best Moving Average Indicators & Settings for TradingView 2025 Guide

It’s crucial to experiment and test other moving averages in a trading strategy. For this reason, combining moving averages with other technical analysis indicators to confirm signals is always prudent. For day traders seeking a reliable technical framework, combining five-, eight-, and 13-period SMAs can be particularly worthwhile. These settings are derived from Fibonacci numbers and have been used successfully by traders across diverse market conditions.

Remember, moving averages are confirming indicators, not crystal balls. They work best when combined with sound market structure analysis and proper risk management. These include the relative strength index, the moving average convergence/divergence indicator, Bollinger Bands, the stochastic oscillator, the Ichimoku cloud, and the average true range.

BEST MOVING AVERAGE FOR 4 HOUR CHART COMBINATIONS

• This very easy and profitable trading strategy on MT4 becomes powerful when combined with proper risk management and market structure understanding.
• So there are times when the price does reach a support or resistance level and still goes sideways.
• Remember, if the next candlestick still touches the EMA line, it is not a good signal.
• It’s a visual process that needs examining the relationships between moving averages and price.

The formula utilizes a smoothing factor known as the ‘smoothing constant’ to assign greater weight to more recent prices. Traders need to understand how this smoothing constant will impact the calculation. A which ema is best for 15 min chart higher smoothing constant will result in less lag and a more accurate representation of current prices.

The EMA Advantage in Momentum Trading

Start with the basics, master one type at a time, and gradually incorporate more advanced indicators as your skills develop. Period and length are essentially the same thing – they both refer to the number of data points (candles) used in the calculation. A 50-period moving average on a daily chart uses the last 50 days of data, while on a 1-hour chart, it uses the last 50 hours. The terminology varies between platforms, but the concept remains identical. The 5-Minute momo strategy is used by currency traders to take advantage of short changes in momentum and could therefore be employed by day traders or other short-term focused market players. Just as important, the moving averages help identify choppy or trendless conditions when traders should stay on the sidelines.

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As a result, EMA reacts more swiftly to price changes compared to SMA. It refers to the first candlestick that heads back up and touches the EMA line after the price steered away from it for some time. Remember, if the next candlestick still touches the EMA line, it is not a good signal. Once you find the right signal, it will be the right time to open a position.

Available to work on various scopes related to trading; from beginner’s guide, technical analysis, broker guides, to fundamental insights. However, in day trading, you’ll typically need a particular pattern before you start your trade and once you find one, make sure to confirm it with the support and resistance levels. The main advantage of the 20 EMA trading strategy is that it is very easy to follow even for novice traders.

Exponential Moving Average (EMA):

With corporate goods prices increasing by 4.0% year-on-year, it’s clear that… The first leg of the uptrend, (A) to (C), lasted 51 five-minute bars and generated 2.59 points or 0.79% without adding spreads and commissions. The second leg of the uptrend, (D) to (E), lasted 35 bars and created 2.64 points or 0.8% without adding spreads and commissions.

In this strategy, we will use MACD with price action to identify the market direction. In a trading strategy, market participants usually focus on multiple confirmations to increase the trades probability. On the other hand, 50 and 200 EMA shows the long-term perspective of the market. The core idea of using this indicator is to consider it as a support and resistance. If the price breaks above the EMA, it may correct lower, and rejection from EMA may push the price up.

Many buy and sell signals can be traded when using the SMA in the above scenario which turned out to be profitable. In simple words, the SMA provides the average price of the underlying asset, for a particular period. MA is plotted by a line on the chart that portrays the average price of the underlying to determine the trend. The slow EMA period determines MACD Indicator Settings the number of periods used for calculating the slower EMA. I’m asking because I see Supertrend being used a lot on TradingView in this article, and I’m not sure if it’s actually available on MT4 or if we need to install it manually or something. A Simple Moving Average would track the movement of price over a specific range of time.

• You should strive to combine MAs with only a few indicators because doing so with many indicators will hamper your decision making.
• A moving average is a technical analysis indicator used to smooth out price action and identify trends.
• Stochastics are calculated by tracking the closing price of a particular security relative to its high and low over a predetermined period.
• Traders should experiment with different moving averages and timeframes to find what works best for them.
• Many buy and sell signals can be traded when using the SMA in the above scenario which turned out to be profitable.
• Using a broker that offers charting platforms with the ability to automate entries, exits, stop-loss orders, and trailing stops is helpful when using strategies based on technical indicators.

Common Moving Average Trading Mistakes to Avoid

As emphasized in the video, moving averages perform poorly during consolidation. The Simple Moving Average gives equal weight to all prices in its calculation period. If you’re using a 100-day SMA, it simply averages the closing prices of the last 100 days. This equal weighting creates a smooth, stable line that many institutional traders watch closely. When trading the five-minute momo strategy, the most important thing to be wary of is trading ranges that are too tight or too wide. In quiet trading hours, where the price simply fluctuates around the 20-EMA, the MACD histogram may flip back and forth, causing many false signals.

It uses both average and recent momentum so that investors can see a quicker way to benefit from intraday liquidity. The core concept of using MAs is to follow what ordinary people are doing. If buyers’ strength is more robust than bears’, the price will be above the moving average, focusing on buy trades. However, if it makes an excessive move from a moving average, it is more likely to come back as a mean reversion.

Hello, I’ve come across information in the article suggesting that the Exponential Moving Average (EMA) relies on historical data, which may not accurately predict future market movements. This uncertainty about future trends poses challenges for traders seeking reliable signals. Could you explain what “leading signals” are and how they differ from other signals? Additionally, what advantages do leading signals offer compared to alternative signal types?

It offers a granular view of intraday price movements, allowing traders to identify and exploit numerous short-term trends and price fluctuations throughout the trading session. This timeframe is particularly attractive for those seeking to generate profits from small price changes, often holding positions for just a few minutes to a few hours. For those using 15-minute charts, the 20-period exponential moving average (EMA) is a great tool. It’s good at showing short-term price movements, which can help you make trading decisions in line with the current trend. The 20-period EMA reacts quickly to price changes, which means it can provide timely information that you might use to decide when to buy or sell. Moving averages are useful technical indicators for traders to identify potential buy or sell opportunities.

Main Forex Info

Alternatively, if this strategy is implemented in a currency pair with a trading range that is too wide, the stop might be hit before the target is triggered. Using a broker that offers charting platforms with the ability to automate entries, exits, stop-loss orders, and trailing stops is helpful when using strategies based on technical indicators. These conditions often trap traders in positions with unfavorable risk-reward ratios, leading to larger-than-expected losses when stops are hit. Some traders complement the EMAs with additional indicators or oscillators to fine-tune their trading decisions, in this context, we’ll gonna use the Supertrend indicator. According to our testing, the success and reliability rates of moving averages are between 7% and 27%.

For example, the chart below shows the 15-minute chart of the Nasdaq 100 with a 200-period and 25-period EMA. The SMA, like other moving averages, is used to identify an asset’s trend, key support and resistance levels, reversals, and stops. There are no rules for indicator settings, and you change the value at any time according to your choice. Best of our findings, we can say 20 EMA is more profitable in 15-minute trading as it focuses on the most recent prices and works as a dynamic S/R area.