Last Updated on March 14, 2025 by Arif Chowdhury
Ever looked at a chart and thought, “Why is this market moving so much?”
Or maybe you’ve felt that nagging worry when a trade seems too good to be true?
Market moves can be wild, and knowing when to jump in or step back is crucial.
Let’s dive into how I’ve used the 87 EMA and Disparity Index to navigate these overextended market moves.
Understanding the 87 EMA
The 87 Exponential Moving Average (EMA) is not just another line on your chart.
It’s a powerful tool for identifying the trend direction.
- Trend Confirmation: If the price is above the 87 EMA, we’re in a bullish trend. If it’s below, we’re bearish.
- Signal Generation: Crossovers can signal potential entries and exits.
What’s the Disparity Index?
The Disparity Index measures the distance between the price and a moving average, showing how overbought or oversold a market is.
Here’s why it’s valuable:
- Market Extremes: A high disparity indicates an overextended move.
- Reversal Signals: When the price diverges significantly from the 87 EMA, it’s often a signal for a potential reversal.
Combining the Two for Smart Trading
So, how do you effectively combine these two indicators?
Here’s a straightforward approach:
- Identify the Trend: Check if the price is above or below the 87 EMA.
- Measure the Disparity: Use the Disparity Index to assess how far the price is from the EMA.
- Look for Confluence: When both indicators signal an overextension, it’s time to consider entering a trade.
Statistical Insight
Did you know that around 70% of traders struggle with timing their entries and exits?
This combo of 87 EMA and Disparity Index can significantly improve your decision-making process.
Why I Use This Strategy
Here’s the deal: I’ve been a Forex trader since 2015.
Through trial and error, I found that combining the 87 EMA and Disparity Index not only helps in identifying overextended moves but also minimizes risk.
I apply this strategy within my 16 sophisticated trading bots.
These bots are designed to trade the major pairs like EUR/USD and GBP/USD, using various strategies, including the 87 EMA + Disparity Index.
Each bot operates within specific parameters, enhancing performance even in volatile markets.
What’s even better?
I’m offering this entire EA portfolio for FREE to anyone ready to step up their trading game.
Practical Steps to Get Started
Ready to put this into practice?
Here’s how you can start trading smarter:
- Set Up Your Chart: Add the 87 EMA and Disparity Index to your trading platform.
- Monitor the Market: Watch for price actions that diverge significantly from the EMA.
- Enter with Confidence: When both indicators align, pull the trigger.
Why Choose My Bots?
With my 16 trading EAs, you’ll benefit from:
- Diversification: Each bot is tailored to minimize correlated losses across pairs.
- Long-Term Focus: They focus on capturing 200-350 pips over time.
- Backtested Reliability: My bots have been tested over the past 20 years, performing excellently even in tough conditions.
If you’re serious about Forex trading, you should definitely check out my trading bots portfolio here!
Finding the Right Brokers
Now that you’ve got the strategy down, you need the right platform.
Choosing a reliable broker can make a huge difference.
I’ve tested numerous platforms, and I recommend brokers with:
- Tight Spreads: Reduces costs on trades.
- Fast Execution: Helps you get in and out of trades efficiently.
- Great Support: You’ll want help when you need it.
Check out my top picks for Forex brokers here.
Final Thoughts
Combining the 87 EMA and Disparity Index is a game-changer for identifying overextended market moves.
With the right strategy and tools, you can navigate the Forex market with confidence.
And remember, my 16 trading bots are here to help you automate your success.
Don’t forget to explore the best brokers to optimize your trading experience.
Happy trading! 🚀