9 30 Trading Strategy

[Darth Sanderson]

Originallythe 9/30 trading setup was developed by Mike Burns and involves using a combination of two moving averages:9-period Exponential Moving Average (EMA)30-periods Weighted Moving Average (WMA)In this case, the 9-EMA is our short-term moving average, while the 30-EMA is out long-term moving average. The 9 and 30 EMA trading strategy seeks to take advantage of the blank space created between the two moving averages.Learn here how to trade with the exponential moving average strategy.

If you want to go short then you to follow this three-step process:9-period EMA must be below the 30-periods WMAThe two moving averages need to be apart from each other (see chart below)The first bar that closes above the 9-EMA will be used as the trigger bar for the sell setupPlace a sell limit order below the low of the trigger barSee a short trade example below:

For example, if you have a buy trade signal, you hide your protective stop loss below the low of the trigger bar. Alternatively, for a more conservative approach, you can hide your protective stop loss below the 30-periods WMA.See the forex chart below:

In this regard, the best time to use the 9/30 trading strategy is when we have established a trend.The trend can be defined via the two moving averages as follows:The bullish trend is defined when the 9 EMA is above the 30 WMAThe bearish trend is defined when the 9 EMA is below the 30 WMAThe strength of the trend can also be measured via the space created between the two moving averages and the angle of the moving averages.The bigger the gap between the 9 EMA and 30 WMA and the steeper the angle of the 2 moving average is, the stronger the trend is. Conversely, the flatter the two moving averages are, the weaker the trend is.

If we add a better entry filter, we can gain an extra edge.What do we mean by this?Instead of using a bar that closes above/below the 9-period EMA, we can wait for the entire bar to be encompassed between the 9-EMA and 30-WMA. However, the downside to this trading approach is that you will get fewer trading setups.

Here is the main reason why we use this approach:We know that the daily range can be quite high. So, instead of using the high of the daily candle to trigger our entry we downgrade our chart and seek lower time frames and early signs of upward/downward price structures.Secondly, this trading approach also reduces the stop loss needed for the daily candle.

Here is an example (see the USD/CAD daily chart below):Based on the 9/30 trading strategy we need to wait for the daily candle low to be tagged to trigger an entry. However, whit this new advanced concept we can enter the market early and capture more pips.

The key takeaways from the 9 and 30 EMA trading strategy can be summarized below:You have the momentum power of the prevailing trend on your sideYou only need to focus on the gap between the two moving averagesOffers you effective ways to manage your riskBuilt-in trailing stopVersatility to be used in conjunction with other trading methodsLast but not least, make sure you use effective money management strategies and position size to protect your capital. After all, your number one priority as a trader is to protect your account balance at all cost.Thank you for reading!Feel free to leave any comments below, we do read them all and will respond.

Sure, you will not be profitable right away. But it provides a great launchpad for a trader who is new to technical tools. When starting out, you will certainly appreciate the simplicity this trading strategy offers.

Think of your trading setup as a piece of unshaped rock. Sure, you can hit your prey with it when you hunt. But you can also fashion an arrowhead from it and attach it to a stick. Then, you have a spear, a more potent weapon with greater range.

However, there was a solid redeeming factor. The setup bar finished as a strong bullish trend bar despite the bearish opening gap. That was a strong bullish signal, not to mention the trend line support.

Observe how the 9 EMA stayed above the 30 WMA despite the seemingly sideways price action. Here, the dual moving averages helped to clarify the raw price action. In the process, they also assured us of bullish undercurrents.

Futures and forex trading contains substantial risk and is not for every investor. An investor could potentially lose all or more than the initial investment. Risk capital is money that can be lost without jeopardizing ones financial security or life style. Only risk capital should be used for trading and only those with sufficient risk capital should consider trading. Past performance is not necessarily indicative of future results.

The website contents are only for educational purposes. All trades are random examples selected to present the trading setups and are not real trades. All trademarks belong to their respective owners. We are not registered with any regulating body that allows us to give financial and investment advice.

To make potentially profitable trades with the 9/30 trading strategy, you need to know how to trade it. Firstly, decide if you will be buying or selling using this strategy. Once you have done this, you can proceed to figuring out your entry. As mentioned in the key takeaways, for a buy you need to make sure that the 9-period EMA is sitting above the 30-period WMA. This is because we need the market sentiment to be bullish before we go any further, otherwise we would be buying in a bear market.

Once we have established that the 9-period EMA is above the 30-period WMA, we need to wait for when the two moving averages are apart from each other to show true divergence. Then we wait for the first bar to close above the 9-period EMA, which we will use as our entry.

Likewise, if we were using the 9/30 trading strategy to short then we would flip it round and do the opposite. We would need to wait for the 9-period EMA to be below the 30-period WMA, then we need to wait for the two moving averages to be far apart from each other. After that we would look for the first bar to close above the 9-period EMA, which will be used as our entry.

Deciding when to use the 9/30 trading setup can be difficult because there can be a lot going on in the markets at any one time. However, to help you figure out when to use this trading method, we have included some screenshots of historical setups.

Like the image below, if we remember the rules for a buy setup, the 9-period EMA (in green) must be above the 30-period WMA and the buy signal is the green candle that closes in between the two moving averages.

If we take a look at another example, a sell we can see that the EMA (again in green) is below the 30-period WMA (again in yellow) and we can see a red candle has closed in between the two moving averages. And just to add some weight to the signal, it is in the middle of a downtrend and the candle signal is a shooting star.

The above trade example would have been considered a winning trade, as per our observation, the green 9-period EMA is below the yellow 30-period WMA, which is one of the rules that we must follow when looking for potential buys.

Next, we have highlighted the exact candle that we would consider as the entry, because it has re-entered the space between the two moving averages and has closed inside. Placing your entry at the close would have taken you all the way down to where the two moving averages cross.

The above trade example could be considered a losing trade based on how long you would have had to hold the trade. To potentially minimise losses, we exit losing trades quickly. Based on the sell signal above, the trade would have gone south at first, but if you had held then you would have realised profits.

However, the debate is how long you might be willing to hold onto a potentially losing trade since the green 9-period EMA has already crossed over the yellow 30-period WMA. This might have been an indication to exit out of the trade, since the evidence suggests that it is due for the bulls to take over.

Using a single strategy on its own is unlikely to make you a successful trader. In fact, the best and most profitable traders combine other strategies together. If you take the 9/30 and combine it with a strategy like price action, it can help you to reinforce your trading methods and ideas.

Using the above example, we can see that current market sentiment indicates that the bulls are in control. Right now, we are waiting for the price to move back in between the two moving averages, and to close. We have our movement back in between the moving averages and we also have confirmation from the red doji candle highlighted by the green arrow.

The doji represents a possible reversal. However, because we are already in an upward trend, we can consider the minor pause as profits being taken off the table. As you can see, the doji breaks through the green moving average and closes just slightly above. However, the next candle absolutely engulfs the previous candles.

Combining Bollinger Bands with the 9/30 trading strategy will help the trading experience become a lot more useful in the long run because of how powerful the Bollinger Bands are. The two together can help you understand what kind of market sentiment is currently in place.

From the screenshot below we understand that the bear sentiment has reversed and is now becoming a bull market. But how can we know for sure? Well, the Bollinger Bands can help us detect this because as we can see by the time we are ready to enter into a trade, the price is already in the top half of the bands and this just gives us the confirmation we need.

You can see below that we have paired the MACD together with the 9/30 trading strategy, and you can also see the MACD is confirming that we are in an uptrend. The two strategies are supposed to complement each other and give the trader confirmation that they need to feel confident about their decision.

3a8082e126