Every new forex trader likes it when money is getting in and not when cash is flowing out of the account. However, this is usually hard to achieve, especially over time. You may make a considerable profit once, but then out of greed, you place another uncalculated trade that drains your live account.

In forex market, if you are ready to make good money and not to give out your money, then you have to be sure of when to enter a trade and when to exit. We can achieve this mainly by using indicators.

Indicators are tiny programs that help a trader identify or spot a market trend. The trend may be short-lived or long-lived. However, not many trading people like it when the mt4 chart gets to look untidy due to the forex indicators. Although you may argue that forex trading on a simple mt4 chart looks cool, it may not be so when trader aren’t sure when to open live trades and how to go for profits.

The exponential moving average(EMA) is one of the indicators to use. This forex indicator assigns different weights to previous prices and also takes into account the preceding price information of the currency under the survey.

Installing and inserting the Forex exponential moving averages into mt4

Download the indicator (scroll down the page to download Double Exponential Moving Average), and save it in the indicators folder inside the MQL4 folder. Do this by opening the forex MT4 platform and clicking the file button. Then open the data folder.

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Once the indicator is copied, close the mt4 platform and reopen it.

Then click on insert, then the custom, and scroll down to locate the Double Exponential Moving Average(EMA) indicator and double click it. Then click ok on the options dialog box.

You are now good to go!

Using the Forex exponential moving average indicator

Once you have your exponential moving average forex indicator on your chart, then watch the market till there is a chart candle or bar that touches the moving average forex indicator line. The indicator is either touched during an market uptrend or on a downtrend.

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Fig.1. using the exponential moving average indicator

When a candle touches the exponential moving average(EMA), open a trade at the close of a chart reversal candle, in the direction of the reversal just at the close of the chart reversal candle. Then place a stop loss(SL) at two to three pips away.

Then as the forex market moves, the stop loss is moved to every next swing high. If you use two indicators, as in figure 2 below, consider both swings.

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Fig.2.swings of the forex exponential moving average forex indicator on a downtrend.

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Fig.2. swings of the forex exponential moving average indicator on an uptrend

The trade is closed when the stop loss is hit. Therefore as long as it is not hit and another swing takes place, move your stop loss to the next swing.

You should note that this is not an indicator that you use once and leave the market expecting to make profits. If you want to make a good profit, you have to be there to watch what is happening. It would be best if you didn’t give up as long as the stop loss isn’t hit.

The objective behind double exponential moving averages is to determine the trend direction.

An uptrend on a two exponential moving average combination occurs when the shorter term of two consecutive averages intersects the longer one upward. On the other hand, a downtrend occurs when the length of two successive averages crosses the shorter one downward. When this happens, then wait for the bars to touch the lines and begin your trading. 

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