The Ribbon Trading Strategy (3 EMA's) -- with David Moadel
hello and welcome to looking at the markets with david modell the ribbon
trading strategy i'm going to show that to you
in a moment uh first if you would like some help
with your trading or investing or if you'd like some help putting together
a plan for your trading or investing because that's important
you can email me for coaching the email address for the coaching is david modell
gmail.com so let's look at tradingview.com
and there is the ribbon it kind of looks like a ribbon right
anyway it's three exponential moving averages that i put up there
all right and also please be aware that this
strategy does not work a hundred percent of the time
it does not work perfectly so i recommend
uh testing it out with demo or virtual trading where you don't use any real
money you want to make sure that it works
before you start investing or trading with real money
and even then uh only use small amounts of money and respect your stop losses
all right have an exit strategy so you don't lose too much money if it goes
wrong all right so yeah it kind of looks like
a ribbon i guess and i've got apple stock up here
but this can be tested out with virtual or demo trading
on different time frames i've got the one
minute candles up here where each candlestick represents one minute
of price action but you can test it out on two minute candles three
minute five minutes candles daily candlesticks one day
candles if you're more of a swing trader for our
candles again just test it out but not with real
money alright make sure it works before you
start using real money with it okay so i've got a ribbon of three
exponential moving averages three emas the five
the eight and the thirteen all right five eight and thirteen
the five is the purple one here light purple and that is clinging
closely to the candles to the price action
uh then the further away one a little bit further away is the eight
ema and that's in blue and then the one that is furthest farthest away
from the candles is the black one here the
13 period exponential moving average all right and so you get that ribbon
there and really before you take a long
position you need two things to happen if you're
gonna try this particular strategy out okay so we'll go
back here let's say you need two things to happen you need
for a candle to go above
all three of the lines all three moving averages
okay uh if a candle is not above all three of them
that's uh basically bearish okay so if the candle is below
all three of them don't go along don't buy because you'll be
fighting against the trend and i don't want you to do that with a strategy all
right the second thing that needs to happen
and both of these need to be true okay so the candle has to be above all
three moving averages it doesn't necessarily have to close
above all three you can make that a rule if you want to
if you want to be extra careful and wait until the candle closes
above all three of them so let's focus in here
so we can see a little bit more clearly and yes
right here uh this candle okay it went above actually so did this one
come to think of it this candle was above
all three as well but there's a problem with this
candle okay and i'm gonna tell you the second rule okay
so yeah okay so this candle is above all three of them
but the second rule is that you need the three lines to be in the right order
the ribbon has to be in the right order it has to be the five above the eight
and the eight above the thirteen okay it has to go in that order from top to
bottom five eight thirteen all right if you wanna look at
it the other way around if you wanna go bottom up okay thirteen
eight and five in that order whichever one is easy for you i like to
start at the top okay so for me it's the purple then the
blue then the then the black all right five ema eight
ema 13 ema now let's take a look at this candle
hopefully you can see it yes it's above all three of them
it even closed above all three of them it closed here at the bottom
of this red candle barely above all three but above them
but are the three lions in the right order not really they're kind of on top
of each other aren't they that's not what i'm looking for i want
to see some space between all three so i can tell
so i can discern that they're in the right order i can't tell if they're in
the right order if all three of them are on top of each other
okay but then you get a candle here it definitely
is above and closed above all three of them and i know the candle
stick is covering the lines but if you removed the candle
okay and i can hover over the three lines here as you can see
the five is above the 8 is above the 13. when i hover over them
i can see it i can see it on top of the candle you see right there on the top of
the candle 5 8 13 okay you can see that they're in
the in the right order from top to bottom
and so you might get in okay and then you ride it up hopefully
when do you get out well one way to get yourself out is if
either of those conditions is not true anymore
then you can just get out of your position you can sell your stock
or whatever it is you're trading so if the candle
closes or goes let's say if the candle goes below
all three of them which it did here you can get out
okay if you want to be super safe which i recommend
okay or if the three lines are not in the right order anymore
notice that both of these things happened at the same time the candle
went below all three of them and also they weren't in the right order anymore
because you had two lines on top of each other i don't
know if they're in the right order here that's not a good sign and so if you
want to be a super safe trader if either one of these is not true anymore you can
get out okay but then as soon as it's true again
you can get back in it was true again right here the candles
above all three and they're in the right order once again there's enough space
between them so i can tell that they're in the right order the ribbon
that is the three lines okay and so you would have been
out here then right back in that's okay if you're using a low-cost or free
type of broker then you know commissions won't cost you much and so you can get
out and then get in again uh without getting eaten up by
commission costs hopefully right all right so
there you go and write it all the way up and then when do you get out well let's
see well over here two of the lines are on
top of each other okay you may have to hover over the
lines to really tell that that's true but the
the eight and the five are right on top of each other here so i'm getting out
of my long position okay and i'm glad that i did and
also actually look at that at the same time didn't the candle close below
all three lines it went below and if you want to be super safe
wait until it closes below and it did at the same time that
two of the lines were not clearly separated okay so either way i would
have gotten out and i would have avoided the downturn
here all right so it's not perfect
you can lose money with any of these strategies that i mentioned it's
possible so please be careful with it but that's
the ribbon okay it's pretty simple only two rules
to get in and if either of those rules is broken
then you can get out and wait for the next opportunity be patient
with it all right i hope this was helpful to you i hope it
gave you an idea of how to start using three exponential moving averages
or what you might call the ribbon trading strategy
if you want more coaching if you want more help i offer the coaching you can
email me at david modell gmail.com for that
coaching i want to thank you for watching and for listening i will
talk to you again soon
you