EMA’s calculations are based on "Profiting With Pivot-Based Moving Averages" book by Frank Ochoa.
How to use it :-
One should have to refer this book for in depth usage of this indicator.
You can use the option's provided in the indicator and the signals have been generated according to the concept in this book.
Don't turn on multiple option's, it becomes clumsy to look.
1. Pullback to PEMA Band:-
Perhaps the most trader-friendly PEMA setup is the PEMA Pull-Back, because it forces you to trade in the direction of an established trend.
In this, u get the signal when the price retraces to 13 and closes above the PEMA Band.
It is like Buy the Dips & Sell the Rips. The idea of the PEMA Pull-Back is to buy the market at a discount during an uptrend, and sell the market at a premium during a down trend.
2. PEMA Cross Over :-
The PEMA Crossover fires a signal when the fast crosses the slow .
If the fast crosses above the slow , a long signal is fired; whereas, if the fast crosses below the slow , a short signal is fired.
Depending on your trader personality, you will have to choose the periodicities of the two moving averages to suit your taste.
Some combination of EMA's are provided.
3. Cross Over :-
A ( ) is basically the of an , meaning the output is the second derivative of the original .
While an is a faster moving average than the , the is on another level in terms of speed.
4. Modified PEMA Cross Over :-
This system is an ultra-fast PEMA crossover signal that has built-in trend confirmation.
The Modified PEMA Crossover system fires signals in the direction of the prevailing trend, as measured by a larger moving average.
For Example, Take (1,3),21 combination. In this we use 1- and 3-period EMA’s for crossovers, and use a 21-period for trend confirmation.
1 and 3 period EMA's are not shown in the chart, Only 21 and signals are shown for clear view.
Therefore, this system will only allow crossover signals to fire when price is above the 21-period , and will only allow crossover signals to fire when price is below the 21-period average.
In essence, the results are usually highly qualified “buy the dip, and sell rip” type of opportunities.
The PEMA setups that are covered in this indicator offer some of the ways to approach the market using moving averages.
Not all setups and styles of trading will fit all traders, no matter how profitable the approach.
You must use what fits your trader profile and your trading approach.
Thank You ..