Last updated: 8 October 2026. Every screenshot below was recorded on 8 October 2026 on an IQ Option Practice account registered in Brazil, on EUR/USD 5-minute candles; the Chart analysis picture in Step 1 was recorded on 5 October 2026. We placed no real-money trade. The tested box shows what the entry rule did on EUR/USD candles recorded between 29 September and 5 October 2026. The strategy is described for the 1-hour chart with a stop and a target; our recording has no hourly history, so the replay uses fixed-time trades instead. The result says nothing about what will happen next.
The strategy needs two exponential moving averages, an EMA 20 and an EMA 50. First the EMA 20 crosses the EMA 50; after a cross upward you buy when a candle first pulls back to the EMA 20, and after a cross downward you sell when a candle first touches the EMA 20 from below. It is described for the 1-hour chart, with a target at the previous high or low and a stop at the same distance. We could only replay its entry, with a fixed-time trade: on 5-minute EUR/USD candles recorded between 29 September and 5 October 2026 the rule gave 22 signals and the 15-minute trades won 10, lost 11 and tied 1, 47.6% of the decided trades. On 1-minute candles the same entry gave 14 signals and the 5-minute trades won 13 of them. Both samples are small and say little about the strategy on the 1-hour chart.
Quick answer
- Indicators: an EMA 50 and an EMA 20 on the price chart, in two colours so that they are easy to tell apart.
- Long: the EMA 20 crosses above the EMA 50; enter when a candle first comes back to the EMA 20.
- Short: the EMA 20 crosses below the EMA 50; enter when a candle first comes back up to the EMA 20.
- Exits as described: a target at the previous high or low and a stop at the same distance (1:1). Our replay used fixed-time trades instead.
- Chart: the strategy is described for the 1-hour chart; we replayed 5-minute and 1-minute candles.
- Tested: 5-minute candles, 22 signals, 47.6% of the decided trades won; 1-minute candles, 14 signals, 13 won. Break-even is 54.1% at an 85% payout, and a few days of one pair prove nothing.
How do you set up the EMA 20 and EMA 50 strategy?
Set the chart
Choose the asset, the chart type and the candle size first: the indicators are calculated from the candles on the chart. The examples in this guide use 5-minute candles on EUR/USD. These steps use the web traderoom on a Practice balance, and the numbers in each screenshot match the numbers in the text. If you do not have an account yet, see how to register.
Step 1: Open Chart analysis
Click the indicators button (1), the wave icon in the chart toolbar at the bottom left of the chart. The Chart analysis panel opens with the tabs Indicators, Templates, Widgets and Scripts. Stay on Indicators.
Step 2: Find the Moving Average
Type “Moving Average” in the Search for indicators box (1) and click Moving Average (2). The same entry gives the simple and the exponential average; you choose the type in the dialog.
Step 3: Add the EMA 20
The dialog opens with a Period of 14 and the Type SMA. Type 20 in Period (1), open the Type list and choose EMA (2), pick a colour (3), blue here, and click Apply (4). The line style box under Thickness can stay as it is.
Step 4: Add the EMA 50
Open Chart analysis again and add a second Moving Average: Period 50 (1), Type EMA (2), a different colour (3), yellow here, and Apply (4). Two colours let you tell the fast line from the slow one at a glance.
Step 5: Use the candle size you will trade
Click the candle time period button (1) in the toolbar at the left of the chart; it shows the current period, 5m in the picture. In the menu that opens, choose a size (2). The strategy is described for the 1-hour chart; the examples on this page use 5-minute candles.
Step 6: Read the two lines
The EMA 20 (1), blue here, follows the candles closely; the EMA 50 (2), yellow, is slower. When the trend turns the faster line crosses the slower one (3).
What are the entry rules?
There are two conditions: the EMA 20 should cross the EMA 50, and then the price should pull back to the EMA 20. For a long position wait for the EMA 20 to cross above the EMA 50, watch the candles come back toward the EMA 20 and enter when a candle hits the line. For a short position wait for the cross downward and enter when a candle touches the EMA 20. Written so that every condition is checked on closed candles:
| Part | Usual rule | Our rule for the replay |
|---|---|---|
| Cross | The EMA 20 crosses the EMA 50 | The EMA 20 closes above (below) the EMA 50 after closing below (above) it |
| Higher signal | After a cross up, a candle hits the EMA 20 | The first candle after the cross whose range contains the EMA 20, while the EMA 20 is still above the EMA 50 |
| Lower signal | After a cross down, a candle touches the EMA 20 | The first such candle after a cross down, while the EMA 20 is still below the EMA 50 |
| Repeats | Not stated | One signal per cross |
| Exit | A target at the previous high or low, a stop at an equal distance | A fixed-time trade: 15 minutes on 5-minute candles, 5 minutes on 1-minute candles |
The strategy is said to suit short-term trading, not long-term investing, and to work less well in highly volatile markets. It is described on the 1-hour chart with an AUD/USD example. We read both lines off the platform’s chart at 31 candles of one window and compared them with the EMA formula: the median difference was 0.01 pip for each line, and the platform draws the point of a candle at its close.
Two signals of the recording, step by step
The first Higher signal and the first Lower signal of the rule on 5-minute candles, in time order, not picked by outcome. All times are the platform clock, which is UTC minus three hours; the date is 29 September 2026.
Higher signal, 09:20
At the close of the candle that opened at 08:45 the EMA 20 (1.134586) stood under the EMA 50 (1.134620). At the close of the next candle both stood at 1.134642 and the EMA 20 was a hair above: the cross upward (1). Six candles later the candle (2) that opened at 09:20 dipped to a low of 1.134975 and touched the EMA 20 (1.134976), which was still above the EMA 50 (1.134802). It closed at 1.13508, so the rule says Higher, and the trade opens at that close. A 15-minute trade ends at 09:40, when the candle (3) that opened at 09:35 closes at 1.134625, 4.55 pips lower: it lost.
Lower signal, 10:50
At the close of the candle that opened at 10:10 the EMA 20 (1.134777) stood above the EMA 50 (1.134766); at the close of the next candle it was under it (1.134742 against 1.134752): the cross downward (1). Seven candles later the candle (2) that opened at 10:50 rose to a high of 1.134585 and touched the EMA 20 (1.134516) from below, while the EMA 20 was still under the EMA 50 (1.134639). It closed at 1.13446, so the rule says Lower, and the trade opens at that close. A 15-minute trade ends at 11:10, when the candle (3) that opened at 11:05 closes at 1.134335, 1.25 pips lower: it won.
The cross and pullback rule, tested
We scored the entry on the 1,334 five-minute candles of our recording with a 15-minute trade, and on the 1,505 one-minute candles with a 5-minute trade, entering at the close of every signal candle.
Tested on IQ Option: the EMA 20 and EMA 50 pullback rule, EUR/USD candles of 29 September to 5 October 2026
| Asset and candles | EUR/USD binary (regular, not OTC): 1,334 five-minute candles (2026-09-29 01:55 to 2026-10-02 20:55 UTC and 2026-10-04 21:00 to 2026-10-05 17:00 UTC); 1,505 one-minute candles (2026-10-02 18:23 to 2026-10-02 20:59 UTC and 2026-10-04 21:01 to 2026-10-05 19:28 UTC). The candles were recorded from IQ Option’s Practice traderoom. The replay places no orders; it only scores the rule on those closed candles, at an 85% payout. |
|---|---|
| Rule tested | The rule on closed candles, the option opening at the close of the signal candle: after the EMA 20 crosses above the EMA 50, the first candle whose range contains the EMA 20 while it is still above the EMA 50 is a Higher signal; after a cross below, the first candle that touches the EMA 20 while it is still below the EMA 50 is a Lower signal; one signal per cross. EMA 20 and EMA 50 as the platform draws them. The box lists 5-minute candles with a 15-minute trade and 1-minute candles with a 5-minute trade. |
| Signals | EMA 20 over EMA 50 and the first pullback, 5-minute candles, 15-minute trade: 22 signals (11 Higher, 11 Lower) same, 1-minute candles, 5-minute trade: 14 signals (7 Higher, 7 Lower) |
| Outcomes | EMA 20 over EMA 50 and the first pullback, 5-minute candles, 15-minute trade: 10 won, 11 lost, 1 tied; 47.6% of the 21 decided trades won; net −$0.11 per $1 staked at 85% (−$0.09 at 91%) same, 1-minute candles, 5-minute trade: 13 won, 1 lost, 0 tied; 92.9% of the 14 decided trades won; net +$0.72 per $1 staked at 85% (+$0.77 at 91%) |
| Break-even | At an 85% payout a trade needs to win more than 54.1% of its decided trades to break even (1 ÷ 1.85); at 91%, more than 52.4% (1 ÷ 1.91). |
A replay is only a look back at candles recorded on the dates above: it placed no real orders, covers about four and a half days of one pair, and counts overlapping trades as if they were independent. A short test proves nothing about the future, and no profit and no win rate is promised here. IQ Option’s own blog on backtesting says that most strategies need dozens, and often hundreds, of trades before a result means anything.
On 5-minute candles the rule gave 22 signals (11 Higher, 11 Lower): 10 won, 11 lost and 1 tied, 47.6% of the decided trades, with a 95% interval of 28% to 68%. On 1-minute candles it gave 14 signals and 13 won, 92.9%, with an interval of 69% to 99%. That figure is striking, and it should be read with care: 14 trades in 25 hours of one pair, 11 of them on 5 October, are too few to rule out luck. The two candle sizes disagree, and neither is the 1-hour chart that the strategy is described for.
Pros and Cons of the EMA 20 and EMA 50 strategy
| Pros | Cons |
|---|---|
| Two lines and one idea: trade the first pullback in the direction of the new trend. | The entry is a touch of a line, and on a candle chart many candles touch it. |
| Works with any candle size; an hourly chart is the usual choice. | Our replay could not test the stop and the target of the strategy. |
| The target and the stop at an equal distance give a simple risk-reward idea of 1:1. | The results of the two candle sizes disagree, 47.6% on 5-minute and 13 of 14 on 1-minute candles. |
Common mistakes
- Entering on the cross itself. The strategy waits for the pullback to the EMA 20 after the cross.
- Taking every touch of the EMA 20. The rule counts the first touch after each cross.
- Using the Simple average by mistake. Both lines are exponential averages; the dialog opens with the type SMA, so choose Type EMA.
- Mixing up the periods. The faster line is the EMA 20, the slower the EMA 50.
- Trusting 13 wins in 14 trades. It is one reading of one short stretch.
Related guides
- Trading with the EMA and EMA and Momentum
- Two SMA lines and Trading with the SMA 20
- EMA and CCI
- All indicator guides and all strategy guides
Frequently Asked Questions
Q: What is the EMA 20 and EMA 50 strategy?
A: Wait for the EMA 20 to cross the EMA 50, then enter on the first pullback of the price to the EMA 20, in the direction of the cross.
Q: Which chart does it use?
A: The strategy is described on the 1-hour chart with an AUD/USD example. Our replay used 5-minute and 1-minute candles.
Q: Where do I place the target and the stop?
A: The target goes at the previous high (or low) and the stop at an equal distance, a 1:1 risk-reward ratio. On binary options there is no stop, only the expiry.
Q: How long should a binary trade last?
A: No expiry is given. In the replay we used 15 minutes on 5-minute candles and 5 minutes on 1-minute candles.
Q: Does the strategy win?
A: On 5-minute candles 10 of the 21 decided trades won, 47.6%. On 1-minute candles 13 of 14 won. Both samples are small.
Q: Why EMA and not SMA?
A: Exponential averages weight the latest candles more, so they follow the price more closely.
