An essential tool for intraday trading is the moving average. Moving averages help smooth out the daily ups and downs in the market and provide a clearer view of market trends. Unfortunately for day traders, important recent price action can be missed when one focuses on just the moving average. A good way to retain the benefits of the moving average but give more weight to recent price action is by using an EMA for intraday trading. An EMA is an exponential moving average. Day traders need to apply discipline when using an EMA just as they do with all other aspects of day trading.

Best EMA for Intraday Trading

As with a simple moving average, the best EMA for intraday trading is a shorter timeframe than for swing trading. Typically, day traders use from eight to twenty days for their EMA while swing traders and long term investors looking for bargains use one hundred and two hundred day moving average. Because exponential moving averages give more weight to recent price action a day trader may want to err on the short side of these timeframes to get information of more value for day trading.

Which EMA Crossover Is Best for Intraday Trading?

When one moving average crosses over another it is significant and commonly means the market is establishing a new trend. The moving averages that long term traders use are longer, such as fifty and one hundred day versus shorter ones for short term traders and even shorter ones for day traders like ten and twenty day moving averages. So are the exponential moving averages shorter for duration for intraday trading. Thus the best EMA crossovers for intraday trading are commonly in the nine to twenty-one day ranges.

Best EMA Combination for Intraday Trading

Whether a day trader is using a simple moving average or an exponential moving average, they should generally use two in order to fully appreciate both longer and shorter market trends within the timelines that they are trading. The best EMA combination for intraday trading is generally in the ranges of 9 and 21 days. This gives two views of market trends and is commonly the most valuable pair of EMAs for spotting a crossover and a market breakout.

EMA Intraday Trading Strategy

Perhaps the most common EMA intraday trading strategy is to pick two exponential moving averages such as eight and twenty and wait for crossovers to place trades. As a general rule a stock price going above a moving average indicates a buying opportunity and going below indicates a selling opportunity or chance to short a stock. As with all approaches a trader must develop the skills to successfully choose, enter, manage, and exit his or her trades with discipline. At DayTradeSafe we teach ways to trade using EMA strategies and others to the point where our students graduate as benchmarked professional traders.

Intraday Trading EMA Settings

Traders will do their best to use EMA settings consistent with their trading strategies. Shorter, in and out, traders will use shorter timeframes and those attempting to ride trades to more substantial profits may tend to use longer time frames in an attempt to identify longer and lasting trends within the context of a single trading session. As with all technical indicators, a day trader is wise to use at least one other indicator along with their EMA.

EMA Setups for Intraday Trading

Selecting an exponential moving average is relatively easy. Click the indicator, click setting and then input. Choose the time period you wish and click OK. The more important part is choosing which timeframe or time frames will be beneficial to your trading strategies. As we have noted, shorter time frames work better for shorter term strategies in day trading and longer timeframes work for longer trades or those that span several days.

Which EMA Is Best for Intraday Trading Penny Stocks?

This is a question that we occasionally get and our advice is typically to avoid day trading penny stocks. Penny stocks trade in thin volume and low liquidity and are generally not good for using technical indicators like moving averages or exponential moving averages. A very real risk when trading penny stocks is to get into a trade and then not be able to get out without a substantial loss because of liquidity issues. If you choose this path in day trading learn apply strict discipline when both choosing and managing your trades.