A trading strategy is a living object that does not mean to be static. A trading strategy is not only the package of trading rules, and that’s just the beginning. A strategy like the 9/30 trading strategy is a trend-following strategy.
It is based on two moving averages. ‘The trend is your friend’ is the common adage in the market. Since no trend moves in a straight fashion, it’s clever to find a way to ride the trend using opportunities offered by the pullbacks. It is a simple way to do that by the 9/30 trading strategy.
9/30 Trading Strategy Explained Step-By-Step
The 9/30 trading strategy is a trend-following strategy. It consists of two moving averages:
- 9-Period Exponential Moving Average (EMA) – Shows the Short-Term trend.
- 30-Period Weighted Moving Average(WMA) – Shows the Long-Term trend.
Apart from these differences, the combination of EMA and WMA gives a wider spread between the MAs; this is the key principle of the 9/30 moving average strategy working. Moving average indicators are the most popular trend indicators used by traders.
Market players, including institutional traders and financial websites like WSJ and Bloomberg, pay sincere attention to key moving averages, which include 9 MA, 30MA, 50 MA, and 200 MA, and use them to make predictions about stocks.
When two moving average strategies are combined, they create a crossover strategy. But, the EMA strategy is mostly used for reversal trading signals, and the best 9/30 strategy is a way to ride the trend from subsequent pullbacks.
What Is 9/30 Trading Strategy Guide And How It Works?
The 9/30 trading setup includes two moving average crossover pullback strategies that utilize the 9-Period Exponential Moving Average and the 30-Period Weighted Moving Average.
Long Setup (Buy)
- 9-period EMA above 30-period WMA.
- Two moving averages apart from each other.
- Wait until the bar closes below the 9 EMA.
- Place a buy order above the high of the bar that closes below 9 EMA.
Short Setup (Sell)
- 9-period EMA below 30-period WMA.
- Two moving averages apart from each other.
- Wait until the bar closes above 9 EMA.
- Place a sell order below the low of the bar that closes above 9 EMA.
- While setting your stop loss, you can use a high or low trigger bar as a starting point.
- Stop loss should not be too high or too low to avoid heavy losses.
How Does It Work?
You need to know the trading process to make potentially profitable traders with the 9/30 trading strategy. Firstly, decide on buying or selling using a 9 30 trading strategy. Once you have done this, proceed to figure out your entry. As mentioned in the key takeaways, ensure that the 9-period EMA sits above the 30-period WMA for a buy.
After establishing the 9-period EMA above the 30-period WMA, wait for 30 minute or until the two moving averages move apart from each other to show the divergence. Wait for the first bar to close the above 9-period EMA. We can use this as our entry.
Likewise, flip it around and do the opposite to do a short setup with a 9/30 trading strategy. Wait until 9-period EMA to go below the 30-period WMA. Again wait for the two moving averages to move apart from each other.
Now look for a first bar to close the above 9-period EMA that can be used as our entry. With all these entries, you would have a nice profit.
Place stop-loss below the last low and with this best strategy, we can even put it under while buying or above while selling the moving averages. This works the same for the short trade but the other way around.
9/30 Trading Strategy And Its Risk Management?
Here are some useful 9/30 trading strategy tips you can keep in mind when you start using this strategy.
- Initially, practice with a demo account.
- The signal will be stronger when the candle is deeper above or below the moving average.
- Signals will be stronger while crossing the moving averages.
- Used on all time frames, but the signal will be more reliable and less noisy when higher the time frame.
- The stronger trend occurs when there is a stronger pullback.
Pros – 9/30 Trading Strategy
- Fit for beginners.
- Will produce some good moves.
- Good indicator for market prolongation.
Cons – 9/30 Trading Strategy
- Lot more potentially successful strategies are there.
- Not recommended to use own strategies.
- Does not fit for higher time frames.
9/30 Trading Strategy And Supply/Demand Dynamics
Trade line bounce – Don’t forget about its premise when trying to improve your trading setup. The 9/30 setup is a retracement setup. It aligns itself with prevailing market trends. It is easy to think of the trend line bounce with this premise. The 9/30 setup uses a pair of indicators when a trend line relies on the price action structure.
Congestion zones – Congestion areas are outstanding support and resistance areas. They provide great value for a trader looking to improve their trading odds.
Volume spread analysis principles – Be cautious while analyzing volume. Adding volume to your arsenal will be confusing if you are not firm with your price analysis. But you have much to gain when you are skilled in reading volume signals alongside price movements. There are several methods to use volume in the market analysis.
9/30 Trading Strategy By EMA
We can use the 9/30 moving average strategy used in many ways. We can use it for long-term, medium-term, and short-term trading. It depends on what you prefer. There are so many ways to improve the 9/30 MA trading strategy.
Multi-time frame analysis is another way to modify the strategy. In this strategy, we can identify the pullback on a higher time frame, the daily time frame, and then step down to an intraday time frame for trading a breakout of local support or counter-trend line.
Conclusion – 9/30 Trading Strategy
A 9/30 trading strategy margin is a fairly effective strategy. When used properly can earn profits through it. It is a relatively simple strategy which means there can be more margin for error when it comes down to making profit results. The power of the 90-winning forex strategy comes from having a prior upwards or downwards trend.
Traders can use this method as a best trading strategy instead of trying to find reversals; this will be the best strategy when combining it with another strong strategy or indicator. That produces more promising results.