Exponential Moving Average Rainbow Strategy
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Among those strategies is something called the ‘exponential moving average rainbow strategy.’ This strategy is a well-known moving strategy that is capable of producing amazing results. It makes use of exponentially moving averages of period 6, 14 and 26. It works very effectively in short time positions.
How to use Exponential Moving Average Rainbow Strategy
Below is a step-by-step tutorial on how to use the ‘Exponential Moving Average Rainbow Strategy.’
Step 1 . Use the candles of 5 minutes to observe the trading of an asset. For this strategy, a 5-minute period is generally considered to be the most appropriate.
Step 2 . Use charting software to add 3 exponential moving average indicators, and the period of these averages must be 6, 14 and 26 period respectively. You should also use different colors for each moving average, and use a bold indicator for the 26 period moving averages since it is the most important one. Smoothly functioning and updated charting software is strongly recommended in this case.
Step 3 . Take the 26 period line as the base line. If you see the 14 and 6 period lines are lying above it, it is bear trading, which means the stock prices will go up. Conversely, if those two lines are below the 26 period line, the prices of shares are expected to fall. Based on these two situations, you should invest accordingly.
It is essentially important that you observe the lines carefully. Grasp the right opportunity, and never trade using this strategy when the period lines are close to each other. The ‘exponential moving average rainbow strategy ’ only works when the 24-period line is far below or above the two other lines.
The good thing about this strategy is that it is less complicated and easier to use than many other strategies of binary options like Candlesticks or Straddle. We recommend, however, that you put a lot of practice on this strategy on a demo platform until you are more confident when actually investing in the real market.
Exponential Moving Average Rainbow Strategy Video