A simple EMA crossover trading strategy with exceptional returns

  • Jan-20-2020

Many traders follow different types of moving average crossover trading strategy but the main problem with such MA/EMA cross over system is whipsaws. When market goes in range bound, many times you get false breakouts which increases your losses/drawdown. How one could avoid such false breakouts and also gain from large trend the stock establishes?

The answer is move to larger time frame. Yes, This strategy explains how trader can benefit from Trend Following by following a simple EMA crossover system when applied on weekly time frame.

Buy rules: Go long when 10 EMA is greater than 50 EMA

Sell rules: Exit when 10 EMA is lesser than 50 EMA

Time frame: Weekly

Many of you must have invested in stocks like Yes Bank, DHFL, Graphite, HEG etc. All these stocks were once a fundamentally strong stocks but due to sudden shift in their business prospects all these stocks tanked and many traders/investors do not know when to exit. Following this strategy rules would have helped you to exit at the right time.

DHFL Trade results: It gave only two trades, both together ended up with 130% returns.

Graphite Trade results: Graphite gave multi fold returns with 653% returns in just one trade,

Stock went from 90 Rs. levels to Rs.1000 levels but many investors were stuck in this stock as it tanked to Rs.200 levels now, however following this strategy would helped you to exit at the right time, as it gave exit signal when stock was at Rs.700.

Even if you apply to Index heavy weights stocks like HDFC, KOTAKBANK you make exception returns.

And this EMA cross over system helps you in identifying multi-bagger stocks as well, we tested this strategy with huge historical data sets. These are some of the stock list that returned multi fold returns.

You can download the historical results of all NSE stocks from this link, http://bit.ly/ema1050 it has been tested from 1994 to 2019.

  • profile
    Deepti Talwar
      4 months ago

    Thank you for laying it down in simple terms ! One question - this applies only to stocks or one can use it for nifty/bnf as well ?

    Reply 0 comments
  • profile
    Tushar Kadam
      4 months ago

    Thanks for sharing this analysis and one of the best one.. but when I tried filtering weekly stocks with above filter it is giving plenty of stocks 400+ which I feel not realistic to purchase any other filter which you suggest can be applied :)

    Reply 2 comments
    • profile
        4 months ago

      You can always filter stocks price based also FNO based. So it gives better clarity to choose the stocks

    • profile
      Square Off
        4 months ago

      Technical analysis helps in tell you when to get in and when to get out. Fundamental analysis can help us telling you which stock to buy. So better short list stocks based on fundamental parameters and apply these EMA rules to know when to get in and get out.

  • Tags | ema crossover system,moving average trading strategy,ema trading strategy,ma trading strategy,swing trading system,swing trading strategy,Positional Trading strategy