Every trader is looking for an edge, a way to think outside of the box, to gain an advantage. This means knowing something that other traders don’t, or perhaps more likely, seeing something that others don’t see.
Everyone wants an angle, from day traders to swing traders. And one of the ways that financial trading might change in the coming decade is through the use of Ripster’s EMA clouds.
These can be used for short-term, day trades, swing trades, and for longer-term investments.
What is an EMA?
An EMA is the exponential moving average and is used to help determine entry and exit points on trades. Traders will place an EMA over their trading charts to help decide when they should buy, or alternatively when they should short or sell.
Day traders will use shorter EMAs perhaps from 7 days up to 20 days. For longer-term investors, they will use moving averages over a longer period of time. This could be from 50 days to maybe as high as 200 days.
Traders use moving averages to determine trends, and to help them react faster to trading decisions.
This indicator has been used by traders for a long time and can show past performances, and help to give an indication of what will happen in the future.
What are EMA clouds?
Ripster 47 is a trader who specializes in both day and swing trading. He is also part of Bio and Tech Trading.
He also spends a great deal of time dispensing advice on trading and how to use EMA clouds. So much so that he invented the EMA Cloud System.
Anyone who has heard of the Ichimoku Cloud system will be able to grasp Ripster’s EMA Cloud System. The Ichimoku Cloud was invented by a Japanese journalist in the late 1960s. It is considered by many to be difficult to grasp at first.
Ripster’s version is more accessible and is becoming widely popular among traders.
The EMA Cloud System takes two different but desired exponential moving averages. The area between these is then shaded in and becomes the cloud.
What is thinkorswim?
Put simply, thinkorswim is a trading platform. While there are better-known platforms out there, thinkorswim has a large and loyal user base.
With the GameStop trading debacle of last year, you have likely heard of Robinhood. Well, thinkorswim is similar to this.
However, thinkorswim has some very complex features and offers detailed analysis and insights. It is used by traders who wish to make investments and sales in forex, stocks, bonds, mutual funds, options, and more.
It can also be used with the EMA Cloud System by Ripster.
How can you use EMA clouds on thinkorswim?
If you want to copy the moves of experienced traders then you will need to incorporate EMA clouds into your trading platform.
Adding the EMA Cloud System into thinkorswim is relatively straightforward and involves copying your cloud link.
You will need to go to the gear symbol in the top right corner of thinkorswim’s interface and click on Open Shared Item. Paste the EMA link here and click on Preview.
Save the shared item under a suitable name, and then click on the Studies menu. Under Load Studies, you will find the file you saved, and this will open up your EMA Cloud in thinkorswim’s main window.
What does an EMA cloud tell you?
Exponential moving averages are useful for indicating strength and resistance. As mentioned before, they help traders look at past performances and then suggest how stocks may perform in the future.
They are used to measure market trends, and thus give hope that trades will more likely be successful. Of course, trading and investments never come with guarantees so any indicator that can add some edge is useful.
EMA is very popular in certain areas of trading, Indeed, when it comes to Forex trading tips every trader should know, understanding EMA clouds is high up there.
Can day traders benefit from EMA clouds?
Day trading has blown up over the last few years. In fact, when the pandemic hit a huge number of brand new day traders began.
CNBC reported on the sheer number of people looking to day trade during the pandemic. While this can be a lucrative way of trading, it can also be costly as many have discovered.
The Ripster EMA Cloud System can be used for day trading, and Ripster himself uses it. However, if you are planning to use thinkorswim for day trading then you need to understand the rules.
Only three-day trades can be executed in a five-day period on thinkorswim, any more than this and the account will be flagged as a pattern day trader.
Incorporating EMA clouds into thinkorswim is extremely easy. How you use these clouds will depend on your trading strategy.
There are endless options with the EMA Cloud System, and through trial, you will find the one that suits you along with thinkorswim.