Profitable Forex Trading Strategy That Works (TEMA)

The triple exponential moving average (TEMA) forex strategy is a built price smoothening strategy.

It’s a profitable trading strategy that really works if you abide by the simple rules to buy and to sell currency pairs.

It is made up of a single exponential moving average, a double exponential moving average, a triple exponential moving and the ADX Candles custom indicator.

We tend to use two TEMA custom indicators, the magenta colored TEMA (28) and the dark blue TEMA (14) for crossover signals.

Chart Setup

MetaTrader4 Indicators: TEMA.ex4 (14) (default setting), TEMA.ex4 (28) (default setting), ADX Candles.ex4 (default setting),

Preferred Time Frame(s): Any

Recommended Trading Sessions: Any

Currency Pairs: Majors and currency crosses

Download

Download Triple Exponential Moving Average (TEMA) Forex Strategy

Buy Trade Example

Fig. 1.0

Strategy

Long Entry Rules

Enter a buy in the market if the following chart of indicator pattern are in display:

  1. If the ADX Candles custom indicator displays a DarkGreen or lime colored candlesticks, it is a signal that price is bullish.
  2. If the magenta colored TEMA (28) line crosses the DarkBlue colored TEMA (14) line downward (TEMA (28) sits below TEMA (14)), it is a signal that price is heading upwards i.e. a bullish trend.

Due to the smoothened nature of the TEMA indicator, it performs better on long lasting trend.

Stop Loss for Buy Entry: Place stop loss below short-term support.

Exit Strategy/Take Profit for Buy Entry

Exit or take profit on position(s) if the following rules or conditions hold sway:

  1. If the ADX Candles custom indicator turns red, it is a trigger to exit or take profit accordingly.
  2. If the magenta colored TEMA (28) line crosses the DarkBlue Tema (14) line upwards as shown on Fig. 1.0, it is a signal to exit or take profit accordingly.

Sell Entry Rules

Initiate a sell in the market if the following chart/indicator pattern(s) are in display:

  1. If the ADX Candles custom indicator displays a red colored candlestick, it is a signal that price is heading south i.e. a bearish trigger.
  2. If the magenta colored TEMA (28) line crosses the DarkBlue colored TEMA (14) line upwards (TEMA (28) sits above TEMA (14)), it is a trigger to sell i.e. a bearish signal.

Stop Loss for Sell Entry: Place stop loss above short-term resistance.

Exit Strategy/Take Profit for Sell Entry:

Exit or take profit on position(s) if the following rules or conditions holds true:

  1. If the ADX Candles custom indicator turns lime or DarkGreen, it is an indication that the current trend being observed is coming to a close.
  2. If the magenta colored TEMA (28) line crosses the DarkBlue Tema (14) line downwards as shown on Fig. 1.1, it is a signal to exit or take profit accordingly.

Sell Trade Example

Fig. 1.1

Free Download

Download the Triple Exponential Moving Average (TEMA) Forex Strategy

About The Trading Indicators

The ADX Candles custom indicator on the other hand superimposes its color on the candlesticks, giving clear information on bullish (green) and bearish (red) candlesticks.

The Triple Exponential Moving Average or TEMA was developed by Patrick Mulloy and was first published in 1994.

It was designed to deal with the problem of lag experienced with trading the traditional EMAs or oscillators.

Trends can be spotted with little lag as a result of its ability to smoothen price fluctuations and filter volatility.

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