Trading Strategy With EMA’s and Risk Management

The trading world often appears mysterious, filled with stories of fear, hope, addiction, and occasional profits. However, many fail to recognize that consistent profitability in trading is driven by discipline, a well-defined strategy, and strict adherence to rules. This lack of awareness is a key reason why 75-90% of new traders enter the market with high expectations but end up losing their hard-earned money. In this research we propose a quantitative trading strategy based on exponential moving average (EMA) crossovers, volume analysis, and structured profit booking. The strategy utilises a short-term 9-period EMA and along-term 15-period EMA to identify trend reversals, generating buy signals when the two different EMA’s crosses under some conditions and sell signals are generated when the opposite occurs. Meanwhile, a confirmation mechanism is introduced, requiring the price to move at least 0.06% above the crossover price while ensuring the crossover candle remains bullish. Additionally, volume conditions are incorporated to validate momentum, ensuring buy signals are triggered only when the trading volume increases in ascending order. To optimize trade management, a multi-tier profit booking system is implemented, allowing partial exits at predefined levels. which ensures that the traders secure gains while allowing profitable trades to run. The strategy’s performance is evaluated through historical back-testing, assessing profitability, accuracy, and risk-reward dynamics. The results demonstrate the effectiveness of integrating EMA crossings with volumes and structured exit points in improving trade success rates. This might become the future of so many people to convert their portfolio from a losing streak to a winning streak.