Trading using the 9 EMA by J-Dog

Introduction: I'm writing this as a guide to assist fellow Trade At Ease

members to a simple yet effective strategy that has many uses for intraday
trading.

ALL TRADES USING THIS STRATEGY ARE IDEAL TO BE DONE ON

THE 5 MINUTE CHART.

What is the Exponential moving average:

Definition: An exponential moving average (EMA) is a type of moving average (MA)

that places a greater weight and significance on the most recent data points. The
exponential moving average is also referred to as the exponentially weighted moving
average.

Why EMA over other moving averages:

Now I can't explain in detail why EMA moves differently than others, but its
reaction to price action is what makes it so valuable to us traders.

What EMA’s I use:

The 9 EMA: if I could only use one EMA this would be it, the 9 EMA will be
your best friend. It will tell you what a stock's current trend is,how strong the
trend is, if the stock is reversing or just retracing a little, and when to enter
and when to sell your position.

The 21 EMA: Similar to the 9 ema its use although not as important does
have functionality in confirmation of a trend and your next level to watch if
the 9 EMA fails to hold during the intraday.

The 50 EMA: The main use of this EMA for me is being the first test of
support/resistance when we see a sudden change in sentiment intraday.

The 100 EMA: Like the 50 EMA when candles break above or below the
50 this will be your next level to watch.

The 200 EMA: I added this personally although not needed it does have a
use that I will outline later in this guide.

Back Testing

Applying a strategy to historical data to see if it is valid.

This is extremely important because with the 9 EMA it is verified no matter
what chart you pull up on the 5 minute time frame.

CANDLES ALWAYS COME BACK TO THE 9 EMA!!!!!!

Drill this into your head as it will help you “exponentially” lol had to add the
pun. On a 5 minute chart no matter how small or large a candle is
eventually they will come back and touch the 9 EMA, knowing this can
drastically change how you look at your charts. Now how you color your
EMA’s is totally up to you but this is what I do to help me recognize what
I'm seeing faster.

The 9 EMA I color blue.

The 21 EMA I color yellow like a yellow light, as to not freak out but have
caution.

The 50 EMA I color red because blowing through a red light isnt good.

The VWAP I color mine purple because that shit sticks out.
Here is an example of TSLA’s chart on 4/7 intraday on the 5 minute
timeframe.

I will go into detail digging into this chart here in the next few slides, but just
want you to get an idea of the EMA’s and VWAP I have defined here.
Looking at this chart I want you to pay the most attention to the dark blue
line the 9 EMA here and how the candles follow that EMA compared to the
others and the VWAP, CANDLES ALWAYS COME BACK TO THE 9
EMA!!!!!!
Highlighted here is what happened at the opening bell, although many don't
agree with me I stay firm in my way in wanting 4-6 candles above or below
the 9 EMA before making a decision to enter or not, and at opening I rather
wait for the first or second test before pulling the trigger.

Also try to pay attention although it is hard to distinguish right now where
the 9, 21,and 50 EMA are staged, this will come into play here soon.
The top circle is when the candles first broke below the 9 EMA, this is your
first indicator that the trend has changed. Once a candle breaks below or
above confirmation is crucial as false breaks do occur. As more and more
candles continue to close below the 9 EMA the stronger the trend
becomes. Now what we wait for once this event occurs is for the candle to
return back and touch the 9 EMA, because CANDLES ALWAYS COME
BACK TO THE 9 EMA!!!!!!

The second circle is when the candle got our first tap of the 9 EMA, here is
when today I entered puts, what strike is up to you, i took close to ITM.

As you can see after this first tap we really had only one questionable tap
of the 9 EMA for around 30-45 minutes of downside to make the puts print
for you.

Also pay attention to the other EMA’s after the candles cross down, the
EMA’s start to fan out and get distance from one another, this is a
confirmation that the current trend is getting stronger the further away they
get from one another.
Here we see our real first test of the 9 EMA on the downtrend. Things to
observe: notice how the 9 EMA becomes flat rather than sloped
downwards, how the candles can't seem to make a decision, and their size
isn’t much of anything. This is when the market or the stock gets stale,if
you're in a play take profits if you feel fit, my puts were up around 90-110%
here.

Shortly after the sideways action we finally got a clean break from the 9
EMA, as you can see on the first highlighted circle. After any break you do
not enter the trade until the first test of the 9 EMA because CANDLES
ALWAYS COME BACK TO THE 9 EMA!!!!!!

Because it was the middle of the day and lunch, not being so quick to jump
into a trade is not a bad thing. The first test of the 9 EMA, the second circle,
we saw the candles break to the upside causing us to reset and now look
for bullish confirmation. As you can see the candles after the break up
consistently closed above the 9 EMA.
After the candles broke up over the 9 EMA we check to ensure that the
candles stay above the 9 EMA and wait for our first test. While waiting for
the first test, the first circle is when the 9 EMA crosses up over the 21 EMA
(yellow), this is another confirmation that the trend is gaining strength.

The second circle is when we get our first test of the 9 EMA, this is where
we entered calls on the bet that we see continuation, although it did break
under it was a false breakdown as it did not confirm the break. The
following candle was a large upwards candle with great volume, when a
candle extends far from the 9 EMA it's a good idea to contemplate an exit
which we did for a solid 20-30%.

The third circle is where the 9 EMA crossed up over the 50 EMA (red),
more confirmation of the uptrend.

The fourth circle was the next test of the 9 EMA, some of us took another
play with calls off the bounce, and shortly after you see the 9 EMA(blue)
cross up over the VWAP (purple) giving more conviction that this run is
more and more solid.

That last run gave us between 50-115% return off our investments.
Now when you add the algo to the mix when I saw the 9 EMA cross down
the algo also triggered a short play, and when the 9 EMA crossed up the
algo showed a long play. This just goes to prove the algo is amazing and
also adds to conviction in our play.

KEY POINTS:

Recognizing the 9 EMA’s value in your day to day trading and the
benefits it can bring just by simply adding it.

Understanding and identifying candles trending above or below the 9

EMA, a possible false breakout or breakdown, indecision of the
candles in conjunction to the 9 EMA, and finally if what you’re seeing
is a reversal or just a simple retracement.

Finally with this knowledge you can effectively have more conviction
when deciding to either take profits or cut your losses with just one
simple indicator.