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I’ve been getting questions about my eight-day exponential moving average (EMA) strategy and I need to clear something up…
If you think you can just throw the eight-day EMA on a chart and start printing money, you’re setting yourself up for disappointment.
The eight-day EMA means nothing without the right foundation. Without a strong trend, proper liquidity and sound market structure, your accuracy hovers around 48% — a coin flip. And nobody builds wealth flipping coins.
This is why I always say structure is probably a thousand times more valuable than a setup. You need to understand the journey of a stock, not just the endpoint. When you combine that structure with one critical confirmation rule, everything changes.
Potential setups turn into high-probability trades that actually work.
The Opening Price Confirmation That Changes Everything
Here’s the rule when trading my favorite eight-day EMA strategy: We only want to buy stocks when the next day’s opening price is higher than the previous day’s closing price, based on the eight-day.
Simple. Precise. Powerful.
This matters because it confirms that algorithms have started accumulating shares. The confirmation rule works because it validates what the big money is doing. If a stock closes below the indicator but opens higher the next day, that’s not random — that’s algorithmic accumulation.
Take Vistra (VST). On Monday afternoon it closed below the indicator at $26.12. Most traders would have jumped in, but we wait. On Tuesday morning it opened at $26.18 — above the prior close. That’s our green light. That’s the signal that institutional algorithms are stepping in.
When Market Structure Meets Algorithmic Confirmation
Another example: Bank of America (BAC) closed at $35.28 on March 15, below our indicator. We didn’t chase. The next morning it opened at 35.66, another clear sign that the algos were accumulating.
This is the difference between guessing and trading with an edge. When the trend is strong, liquidity is solid, structure is clear and the opening price confirms institutional activity, you’re no longer hoping.
You’re stacking probability in your favor.
So wait for the structure. Wait for the confirmation. Then act with confidence.
I hope that helps!
Roger Scott
Roger Scott Trading
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