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YouTube transcript (cvSX1zCES7Q) — Transcript

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0:00I want to teach you a very accurate EMA
0:02settings. I will teach you a trading
0:04strategy based on these EMAs that tells
0:07you exactly when to enter and exit
0:09trades. Just make sure you watch this
0:11video until the end and let's get
0:13started. All right, we need five
0:15exponential moving averages and we're
0:17going to give them amazing settings and
0:19combination that will help us to find
0:22the most accurate buy sell signals in
0:24the market. Before I add the moving
0:26averages, if you like my content, please
0:29support the channel by liking the video
0:31and subscribing to my channel if you
0:33haven't subscribed yet. All right, let's
0:35add the EMAs. Here we click on
0:38indicators and we search ribbon. This
0:40one, moving average ribbon, which is a
0:43built-in indicator on TradingView
0:45platform. This indicator will add four
0:48moving averages to the chart, but we
0:50need to change their settings. So here
0:52we go to the settings of the ribbon and
0:54first we remove one of them because here
0:57we're going to add three moving averages
0:59and three of them should be exponential
1:01moving averages. So here for the type of
1:04the moving average, we set EMA for them.
1:07And then here for the length of the
1:09moving averages, we set 200 for three of
1:12them.
1:14Then here for the first EMA, for the
1:16source of calculation, we set it based
1:19on high. For the second one, it should
1:21be based on close. And for the third
1:23one, it should be based on low. So here
1:26we have three exponential moving
1:28averages with the same length of 200,
1:31which the first one is based on high,
1:33the second one is based on close, and
1:35the third one is based on low. Finally,
1:37we go to the style tab and we increase
1:40the thickness of the moving average
1:42lines so we can better see them and
1:44track them on the price charts.
1:47All right, we're done with the settings
1:48of these three exponential moving
1:50averages and now we need to add another
1:53two EMAs. So here we click on indicators
1:57and we add another ribbon. This one,
1:59again another four moving averages are
2:02added to the chart, but we only need two
2:04EMAs with the settings that we need. So
2:07here again, we go to the settings of
2:10this ribbon and first here in the input
2:12tab, we remove two of the moving
2:15averages and for these two moving
2:17averages, we set the type of the moving
2:19average to EMA. For the first EMA, the
2:23length should be set at five and for the
2:26second EMA, it should be at eight. And
2:28both of them should be based on close.
2:31For the first EMA with length of five,
2:33we set the color to white and for the
2:36second EMA with length of eight, we set
2:39the color to green. And finally, we go
2:41to the style tab and we increase the
2:44thickness of the lines so they will be
2:46better visible on the price chart. All
2:48right, everything is already set on the
2:50charts and now let me teach you how you
2:52can find accurate buy sell signals based
2:55on this setup. But before that, I'm
2:57proud to announce that I have published
2:59a book, The Arts of Price Action
3:01Trading, which is a complete guide to
3:04price action analysis. The link is in
3:06the description and you can get it later
3:08if you want to master price action
3:10trading. All right, this trading
3:11strategy is a reversal trading strategy,
3:14which means that we are trying to
3:16identify when a new trend is starting in
3:19the market. These three lines here are
3:22EMAs with length of 200, which are based
3:25on low, high, and close. You can see
3:28that they have created a channel on the
3:30price chart and we're going to use it
3:32for early signals that show probability
3:35of reversal. In the first step, we want
3:38crossing of the price above or below
3:40this channel. For example, here you can
3:42see that the price was above the channel
3:45and then it crossed the channel and went
3:47below the channel. This is a signal that
3:50probably a downtrend is starting in the
3:53market. But we don't take any trade now
3:55because we need more evidences that a
3:57reversal is really happening in the
4:00market. In the second step, after the
4:02price went below the channel, we want
4:05the green line and the white line also
4:07below the channel. If you remember, they
4:10are EMAs with length of five and eight
4:13and they're going to help us with
4:14short-term momentum changes. This
4:16channel, which is based on EMA with
4:19length of 200, is helping us with
4:21long-term trend and these two lines
4:23here, the green line and the white line,
4:26which are EMAs with length of five and
4:28eight, are helping us with short-term
4:30momentum changes. In the next step, we
4:33want a pullback of the price to this
4:35channel. It can be just touching of the
4:37channel or we can have the price inside
4:40the channel. But the price shouldn't
4:41close and go above the channel because
4:44it will be long position setup, which I
4:46will explain it later. So here in this
4:48case, you can see that we got a pullback
4:51of the price to this channel and in this
4:53situation, the white line is above the
4:56green line, which means that we have
4:58increased upside momentum in short-term
5:00perspective. If this reversal is real
5:03and now in the market there is more
5:05downside momentum than upside momentum,
5:08so the price should stop here and then
5:10it should reverse down. To know when the
5:13pullback is ended and the price is going
5:15to decline more, we can use two methods,
5:18price action or these two green and
5:20white lines. For the price action
5:22method, when the price goes for a
5:24pullback, before that a swing low is
5:27formed. We mark the lowest low here and
5:30we wait to see if the price can break
5:32this level or not. In this case, you can
5:34see that this candle is closed below
5:36this low, so based on price action
5:39confirmation, we could enter a short
5:41position at this point. But if we use
5:43these two EMAs, we wait for the white
5:46line to close below the green line. You
5:48can see that when this candle is closed,
5:51the white line is already closed below
5:53the green line. So based on this method,
5:55we could enter a short position at this
5:58point with the stop loss above the
6:00channel and profit target at risk to
6:02reward ratio of two. Here in this case,
6:05price action method would give you a
6:07much later entry, but it is not always
6:09like this and with price action
6:11confirmation, you can say with higher
6:13probability that a reversal is forming
6:16in the market because you enter a trade
6:19when the structure of the prior uptrend
6:21is completely broken. But by the help of
6:24these two EMAs, you enter a trade when
6:26there is momentum change in the pullback
6:29that can signal end of the pullback. All
6:31right, this was a short position setup
6:33and now let me teach you a long position
6:36setup.
6:39Here, following this downtrend, you can
6:41see that the price crossed the channel
6:44and went above the channel. This is a
6:46signal that probably an uptrend is
6:49starting to form in the market. In the
6:52next step, we want both of the green
6:54line and the white line to also go above
6:57the channel. From here, when these
6:58candles are closed, you can see that
7:00both of the green line and the white
7:02line are already above the channel. Now
7:05in the next step, we want a pullback of
7:07the price to the channel. As I said, it
7:10can be just touching of the channel or
7:12we can have the price inside the
7:13channel. But the price shouldn't close
7:15and go below the channel because that
7:18would be a short position setup that I
7:20explained earlier. Here you can see that
7:22we had pullback of the price to this
7:24channel and in this situation, you can
7:26see that the white line is below the
7:28green line telling us that we have
7:30increased downside momentum in
7:32short-term perspective. In the next
7:34step, we need to know when the pullback
7:36is ended. As I explained earlier, we can
7:39use price action method or we can use
7:41these two green and white lines. In this
7:43method, we wait for the white line to
7:46close above the green line. You can see
7:48that when this candle is closed, the
7:50white line is already above the green
7:52line. So in practice, we could enter a
7:54long position at this point when this
7:56new candle was opened with the stop loss
7:58below the channel and profit target at
8:01risk to reward ratio of two. If we
8:03wanted to use price action confirmation,
8:05we would enter here when this candle was
8:07closed because this is where the price
8:10is closed above the highest high before
8:12the pullback. All right, now let me show
8:14more examples so you completely
8:16understand this trading strategy. But
8:18before that, I must mention an important
8:20point about trading. If you want to
8:22improve in trading, you need a trading
8:25journal. You need to track your
8:26performance so you can build discipline
8:29and avoid repeating of the same
8:31mistakes. I have created a trading
8:33journal. It is available on Amazon now.
8:36The link is in the description and you
8:38can get it later and start journaling
8:40your trades. All right, getting back to
8:42our trading strategy, here you can see
8:44that the price went below the channel
8:46and from here you can see that both of
8:48the green line and the white line are
8:50also below the channel and before
8:52further declining of the price,
8:54instantly we got a pullback of the price
8:57to the channel as you can see. And you
8:59can see that the white line is also
9:01above the green line. Now we should wait
9:03for a signal that shows end of the
9:05pullback. And in a short position setup,
9:08this is when the white line is closed
9:11below the green line and it happened
9:13here when this candle is closed. So in
9:15practice, we could enter a short
9:17position at this point with the stop
9:19loss above the channel and profit target
9:22at risk to reward ratio of two. And you
9:24can see that this trade was also a
9:26profitable trade. Moving on the chart
9:28following the downtrend, here you can
9:30see that the price went above the
9:32channel and after that the green line
9:34and white line also above the channel
9:37and in the next step, we should wait for
9:40a pullback of the price to the channel.
9:42You can see that it happened here and at
9:44this point, when this candle is closed,
9:46you can see that the white line is
9:48closed above the green line telling us
9:50that probably the pullback ended and the
9:53price is going to advance more. So we
9:55could enter a long position at this
9:57point with the stop loss below the
9:59channel and profit target at risk to
10:02reward ratio of two. And you can see
10:04that this trade was also a very
10:06profitable trade following this uptrend.
10:09Here at this point, you can see that the
10:11price went below the channel giving the
10:13signal that probably a downside reversal
10:16of the price is happening in the market.
10:18After the price went below the channel,
10:21you can see that the white line and the
10:22green line also went below the channel.
10:25And here we got a pullback of the price
10:28to this channel. And at this point, when
10:30this candle is closed, you can see that
10:33the white line is closed below the green
10:35line. This is a signal that probably the
10:38pullback ended and the price is going to
10:40decline more. So, the downside reversal
10:43here is confirmed and in practice we
10:45could enter a short position at this
10:47point with the stop loss above the
10:49channel and profit target at risk to
10:51reward ratio of two. And you can see
10:53that this trade was also a very
10:55profitable trade. All right, moving on
10:57the chart following the downtrend. Here
11:00you can see that the price went above
11:02the channel. And after that, the white
11:05line and the green line also went above
11:08the channel. And then we got a pullback
11:10of the price to this channel as you can
11:12see. And here at this point, when this
11:15candle is closed, you can see that the
11:17white line is closed above the green
11:19line. And this is a signal that probably
11:22the pullback ended. So, in practice we
11:24could enter a long position at this
11:26point with the stop loss below the
11:28channel and profit target at risk to
11:30reward ratio of two. And you can see
11:32that this trade was also a very
11:34profitable trade following this uptrend.
11:37Here you can see that the price went
11:40below the channel. And after that, the
11:42white line and the green line also went
11:45below the channel. And then we got a
11:47pullback of the price to the channel.
11:49And at this point, you can see that the
11:51white line is closed below the green
11:54line, which shows that probably the
11:56pullback ended. So, in practice we would
11:59enter a short position at this point.
12:01But this is a losing trade because the
12:03price didn't decline enough to reach to
12:05our expected target. But if we used
12:08price action method, we wouldn't have
12:10entered a short position here in this
12:12case because the lowest low before the
12:15pullback, which is here, was not broken
12:17by the price. I explained earlier that
12:19by considering price action method, you
12:22will enter when the structure of the
12:24prior trend is completely broken. But
12:26please pay attention that this doesn't
12:28mean you will not encounter false
12:29signals. No, there is no trading
12:31strategy or method that can give you
12:33guaranteed signals. Instead, you need to
12:36manage your risk properly so you can
12:38minimize the effect of your losing
12:40positions. There is a risk management
12:42strategy that is called 1% rule and it
12:44is one of the best risk management
12:46strategies and recommended by
12:48professional traders. I have a complete
12:50guide on this. The link is also placed
12:52in the description and make sure you
12:54watch it now because without a proper
12:56risk management, you cannot survive in
12:59this game. All right, that's it. Thank
13:00you for watching this video. If you have
13:02any questions, feel free to ask and
13:04leave a comment for me. I'll answer your
13:06questions as soon as possible. If you
13:08haven't subscribed to my channel, please
13:10subscribe and hit the bell so you get
13:12the notifications of my new video. See
13:14you guys in next video and good luck
13:16with your trading.

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