A Simple strategy for swing traders or even for cash market people…

Before proceeding ahead, let me make it clear that the strategy mentioned below is not a holy grail strategy, if you are parting with stock market measure risk before taking any position as stock market returns are not like fixed deposit returns, if you don’t measure risk don’t make any position in stock market.

Strategy is formed using three exponential moving average, many people underestimates moving average as a tool. There is not just one right way to use moving averages. It can be used to find out the trend of the market, dynamic support resistance in the market, and can even use to figure out the exact pin point for buying or selling. Kindly note, this strategy will work only in trending market.

If you are not aware about what is moving average than take a break and please click on the below mentioned link to get a basic understanding of the same.

https://twitter.com/rachitpjain/status/1028111826972602368?s=19

Setup :

Apply EMA 50 to high price,

Apply EMA 15 to close price, and

Apply EMA 50 to low price.

Buying Conditions

  • 15 EMA (black color) should cross above all the moving averages.
  • Buy as soon as the above condition is met.
  • Place your stop just below the recent swing low.
  • Take profits when the 15 EMA falls to touch the 50 EMA/reaches first trouble area like facing resistance from strong resistance zone or any reversal conditions like pin bar formation/ bearish candlesticks clue…
  • One can also look for pyramiding opportunity when stock comes near 50EMA and price not sustaining below the 50EMA.
  • Time Frame - 4hr/ Daily/ Weekly…
  • You can also form intraday strategy using the same logic just use smaller time frame like 5/15 min or 3/10 mins..

  • In similar manner one can utilise the same setup for going short
  • 15 EMA should cross below all the moving averages.
  • Sell as soon as the above condition is met.
  • Place your stop just above the recent swing high.
  • Take profits when the 15 EMA rises to touch the 50 EMA/reaches first trouble area like facing support from strong zone or any reversal conditions like pin bar formation/ bullish candlesticks clue…

In above setup if you mix knowledge of candlesticks/support & resistance/ chart patterns it will work more smoothly and will help you in avoiding false signals.

Follow me on my twitter handle @rachitpjain for more market related updates.
Cheers..!!!

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Disclaimer :
I am not a SEBI registered advisor, Any Advice or information on this document is general advice for education purpose only and does not take into account your personal circumstances, please do not trade or invest based solely on this information. By Viewing any material or using the information within this doc. you agree that this is general education material and you will not hold any person or entity responsible for loss or damages resulting from the content or general advice provided here. If I post something here that you find helpful as you build or manage your portfolio, that’s wonderful but do not consider it as a financial advise.

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