In trend trading, the EMA indicator can serve as an important measure for distinguishing the direction of operations.
When prices are running above the moving average system, establishing long positions in the direction of the trend is a right-side trade; conversely, shorting against the trend belongs to left-side speculation. If prices are below the moving average, opening short positions in the direction of the trend is the right-side operation, while bottom-fishing against the trend is classified as left-side trading.
This trading logic, which uses moving averages as a watershed, is essentially about formulating strategies by observing the relative position of prices to dynamic support/resistance. By sticking to participating only in trend-following trades after price breaks through the moving average, one can avoid the risks of subjectively predicting turning points and filter out over 70% of market noise.
This mechanized execution system not only significantly reduces decision anxiety but also effectively avoids irrational operations caused by human weaknesses.
It is worth noting that the choice of moving average period should match the trading period, and it is recommended to conduct secondary confirmation in conjunction with changes in volume. When prices rely on moving averages to form effective support/resistance platforms, the success rate of right-side trading will be significantly enhanced, which is the core advantage of trend-following strategies.
