Blockchain and Cryptocurrency Advanced - Trade Entry and Exit Criteria Using TEMA

When it comes to making use of TEMA, crossovers has proven to be really effective way of identifying buy and sell, entry and exit signals.

For Buy Entry and Exit Criteria

For buy entry and exit, using a combination of two TEMA indicators as different period length is great for identifying trends and direction of the market. A bullish crossover or golden cross is a strong indication that the price is bullish.

For the bullish crossover, the smaller period 50 TEMA line has to cross above the longer period 200 TEMA line and the price has to be above the two TEMA lines. This bullish crossover means that the buyers or the bulls are about to take control of the market.

However, it is important to wait for more candles to form before placing a buy trade. For me, I waited for the at least three green candles to form after the red candle failed to break below the 50 TEMA line.

With this, a buy signal is confirmed and a buy trade can be placed with appropriate risk management strategies like take profit and stoploss.

With a risk:reward ratio of 1:2, take profit and stoploss is set for the buy entry and exit.

For Sell Entry and Exit Criteria

For sell entry and exit, a bearish crossover or death cross is a strong indication that the price is bearish.

For the bearish crossover, the smaller period 50 TEMA line has to cross below the longer period 200 TEMA line and the price has to be below the two falling TEMA lines. This bearish crossover means that the sellers or the bears are about to take control of the market.

Before placing a sell trade, it is important to wait for more red candles to form before placing a sell trade. For me, I waited for the price to bounce down from the 200 TEMA line which served as the resistance line.

With this, a sell signal is confirmed and a sell trade can be placed with appropriate risk management strategies like take profit and stoploss.

With a risk:reward ratio of 1:2, take profit and stoploss is set for the sell entry and exit.