How To Use EMA FILTERS • Pine Script [OUTDATED V4] Tutorial

hi traders in this video i'm going to
show you how to create
an ema confluence filter for your
scripts
so basically what that means is here i
have two emas plotting onto my chart
we have a 50 ema here
and 100 ema below it and for this
particular script it doesn't matter what
entry reasons
you detect in your script you can be
detecting any candlestick pattern that
you like
but for today's example i'm keeping it
very simple and the entry reason we're
detecting is just simple engulfing
candles they don't have to be swing lows
they just need to engulf the previous
candle and
what this script is doing is first of
all
price must be above this 50 ema before a
valid
signal will be detected but the
50 ema must also be above the 100 ema
before a valid signal is detected and so
in today's
video i'm going to show you how i
created this script so first of all
let's remove the script
reset the chart and create a new blank
script so here i am with a blank script
let's get started first thing i'm going
to
do is always is get user input and for
today's video we're just going to get
two
uh inputs two ema length inputs so here
we have two inputs ema length one
ema length two of type integer and we're
just going to set it to 50 and 100 by
default
and the next thing we're going to do is
get the actual ema's
so we need ema1 is set to ema close
with the length of ema length 1 this
input here
and then we'll just copy this paste it
down here and change these to
two so there's our emas now we can draw
them to make sure that they're working
properly
so the first one i'm going to plot as
ema1
and i'm going to change the color based
on where the price is above or below it
so we're going to say
is the close above ema 1 if so set the
color to color.green
otherwise set it to color.red and we're
going to give it a line width of two
let's thicken it up a little bit now
copy this line of code paste it in there
change this to ema2 and we'll just get
rid of this because
it'll be confusing to have both ema's
changing color we'll
just set this second ema to color.blue
and we'll just thicken it up a little
bit change the line width to three
save the script we shouldn't have two
emas drawing there perfect
and so now in order to get the filter
and detect whether these ema's are above
or below
each other we need to detect some entry
reasons
so here i'm going to say detect entry
reasons and again this could be any
entry reason you want
i'm just using engulfing candles today
because they're an easy example
so i'm going to create two variables
here long entry and short
entry long entry is going to be set to
whether the
current candle close is greater than or
equal to the previous candles
open and did the previous candle
close as a bearish candle
or a doji was a previous candles closing
price less than or equal to the previous
candles opening price
and then it's just the opposite for a
bearish engulfing candle
so there's our long entries and short
entries now we can plot these
to the chart so create a new section of
code
here call this plot entry signals
and we'll just use plot shape for this
not plute
shape plot shape uh long entry
i like to do it this way if you don't do
it this way
i'll show you what happens in a second
but what we're doing we're saying
if we have a long entry then set plot
shape to 1 which means it will plot
a shape otherwise plot n a and we'll
give it a style of shape dot
pro up for a bullish candle and the
color will be color.green
and the location will be location dot
below
bar so just really quickly let me save
the script make sure that's working
there we go so now the reason why
i like to do it this way
because we could just get rid of this
code here and this will still compile if
i save the script
you can see it's doing exactly the same
thing the difference is
up here so when we have a signal
you can see that this plots 1.0000
or however many decimals are on your
price chart but now if i go to
any candle that does not have a signal
we're also getting 0.000
this is obviously a long number and if
you've got a lot of plots
in your script these numbers can add up
quickly
if you have six digits plotting for
every single shape on your chart
whenever there's a no signal
it'll just really clutter up your chart
so i like
to add this little bit of code in here
so what we're saying is we're saying
if we have a long entry detected then
set this plot shape to 1 which means
true it'll just draw the
shape otherwise plot n a so now if i
save the script
you'll see that when we hover over any
candle that does not have a signal
we're just plotting n a it's much
shorter than a six digit number
so that's why i do that here let's move
on
copy this line of code paste it in here
get rid of blow bar because by default
this plot shape plots above the bar and
for
bearish signals that's just fine
so we're going to plot shape for every
short entry
and the color of color.red now if i say
the script we'll be getting
bearish engulfing candles plotting to
our chart as well
but we're not taking into account our
ema filters yet
so for that let's add a new section up
here
called get filters we're going to have a
long filter
and a short filter now our long filter
is going to be there's a couple of ways
we can do this first of all
we could just check if the emas are in
confluence so we could just say here
is ema1 greater than ema2
or is ema1 less than ema2 for a short
filter
then if we add this boolean into our
entry reason detection down here so
short
filter and long filter combined with our
long entry and short entry conditions
now if i save the script we'll only be
getting long
bullish engulfing candles plotting if
this 50 ema
is above the 100 ema
and vice versa for shorts we'll only be
plotting
bearish signals if the 100 ema is above
the 50
ema so that's the first part of an ema
compliments filter
and this works just pretty pretty good
works pretty fine actually
uh but if you want to take it one step
further you can also detect
if price action is below this 50 ema
for shorts or above for longs so if we
wanted to we could add into this long
filter
is the current close greater than ema 1
and is the ema 1 above
our ema2 and vice versa for short so we
could say
is the price of the current candle below
ama1
and is ema1 below ema2
so when i save the script here this
entry pattern here is going to go away
as is this one here and this one up here
so now if i save the script so there we
have it so now we're only plotting
signals
if the 50 ema is below the 100 ema and
price action is below the 50 ema
and the opposite for long trades so
that's one way to apply
an ema filter uh but before i end this
lesson i thought it might be interesting
to show you guys how you can
disable your ema 2 in your script in
case
you have a script that has this
functionality in it
but you want to allow both options for
your users so you want to allow
the user to disable ema2 and only use
the ema1 as your filter the easiest way
to do that is to just set ema
2 to 0 ema2length to 0
and detect that in your script so i'll
show you what i mean right now
so down here we can change our filter to
say
is the closing price above our ema 1
and is ema1 above ema2 or
is ema length two equal to zero
and copy that down into there and so now
our filter
will return true if price is above the
ema
and our emas are in confluence or we've
disabled
ema2 by setting its length to zero now
the problem is if i say the script will
get an error
whenever i come up and set this to zero
because
you cannot have if i click on that it'll
tell me the error
we cannot have a length of 0 passed to
the ema function
must be above 0. so what we need to do
here
is say ema length 2
equal to 0 question mark then set it to
1
otherwise set it to ema length 2. so
what we're saying here is we're saying
for our second ema
if the user has set ema length 2 to 0
then we just want to get an ema with a
length of 1
otherwise we do want to use our ema
length 2 parameter
because it's set to something other than
0.
so now if i say the script that will
work just fine
if we come up here and we set email
length 2 to 0
we'll be getting any signal that closes
above or below this 50 ema but you can
see we're also plotting
our second ema with a length of one so
if we come down to where we plot our
emas
and we check here if our ema length two
is set to zero
so ema length two equals zero question
mark
then we want to draw n a
otherwise we actually do wanna draw our
ema
two so now let's save the script
minimize that come up to the settings
menu and set ema length two to zero
our second ema goes away and it is now
no longer being considered
in our filter check uh if you didn't
understand anything in this video just
rewatch it it'll make sense i'm
sure but basically what we're doing here
is we now have two emas
if our first ema is
above our second ema and price action
is above our first ema
then the script will be looking for long
trades
otherwise if our first ema is below
our second ema and price action is below
the first dma then the script will look
for
short trades and if you want to you can
come into the settings menu here
set ema length two to zero hit ok
and now this script is only using the
first ema as the filter this is a
very simple filter very simple method
but it works very well but finally
one last thing that i have found useful
in my own scripts
is to detect how many candles
are above or below the ema preceding the
setup
so for example in this case you can see
we have
two candles that closed above the ema
immediately preceding
our setup what happens if you want to
invalidate the setup
based on this condition as well i'll
show you how to do that really quickly
so here we come up here and above our
filters
let's add in ema breach check
and what we're going to do here is we're
going to create two new variables we're
going to say
bars above ema and bars below
ema and this is going to be set to 0
by default then we're going to use two
for loops here we're going to say 4
i equals 0 2 and
let's create a new input variable up
here i will say
e may look back and this is just going
to be another input
with a title of ema lookback a type of
integer and a default value of
three so we're going to look back three
bars and count
how many bars are above or below the ema
and incorporate that into our filter
so here i can change this through to ema
look back
and now we can check if the close
of our current iteration we can just put
i in here
which is this guy here so if the current
adoration of our loop
our for loop looking back if the closing
price of that candle
is above the ema one then we want to set
bars above ema to bars
above ema plus one and we can also check
in the same for loop we can also count
how many bars close below the eme
so here we'll say if the closing price
of the current
iteration of this loop so you know we're
looking back
one two three candles if the current
candle
is below the ema or the previous candle
or the one before that then that will
increment our bars below
variable by one so this is how we
count candles beyond the
ema so now if i save the script should
compile without any errors
there we go now all that's left to do is
add these checks
into our filters so i'm going to create
one more user input here it's going to
be called max bars beyond ema
it's going to have a title of max bars
beyond ema
it's going to be of type input.integer
and have a default value of one so we're
only allowed one bar
to close beyond the ema over the past
three candles by default for a signal to
be considered
valid so now if i come down to our long
filter and short filter
we can add on the end here and bars
for a long trade where checking bars
below ema
is less than or equal to max bars beyond
ema and the opposite for short trades
we're checking
and bars above ema is less than or equal
to max bars
beyond ema so now if i save the script
we come up to the settings menu and we
turn off our second ema that will bring
back this example here
and look at that we are now invalidating
this setup here because we have had more
than one candle
close above this 50 ema over the past
three bars
so now if i come up to the settings menu
here if we change this max bars
beyond ema variable to 2
let me click ok this setup will come
back
because it's now considered valid
because we can have a max of two candles
closing above the ema for short trades
and obviously for long trades
it is the opposite so back here if i set
this back to
one ah sorry if i set this to zero
that will invalidate this setup here
because we've had one candle close below
the ema
so this is a great way to avoid taking
signals
around the ema when price is
consolidating
around it so typically speaking when
the ema is tested as support or
resistance
and price responds from it it's often
likely that we only have a maximum of
one candle closed
below it if we have more than one candle
close below it preceding a setup
then that usually means that the ema is
being ignored
so that i found in my personal trading
that the optimal setting for this filter
is one bar
beyond the ema over the past three bars
preceding
our setup so if we zoom out a little bit
look for some examples so you notice
we're working off closing prices here
not wix because any wix test in the ema
is a good sign that's a bullish sign
that this ema is acting
as support and pushing price up but
if price hovers around the ema
for a little bit too long such as in
here
we do not want to be going short on any
short signals
if price is consolidating around the ema
because that means we're either entering
a period of consolidation
or price wants to reverse so i hope you
found this lesson interesting i'm going
to leave it there
i don't want it to get too long we
covered a lot of subjects here we've
covered how to create a single
ema filter we've covered how to
create two ema filters in confluence
with each other we've covered how to
create a filter with an ema breach look
back
so we're searching back three bars
counting how many bars close beyond the
ema
so above the ema for short trades below
the ema for long trades
and if we have too many bars closing
beyond the ema
then we're adding that filter in our
script as well
and there's just a few ideas for you to
play around with in your own scripts
to add some ema filters to potentially
optimize your strategy scripts
or your setup detection indicators if
you have any questions
shoot them to me otherwise i will see
you in the next lesson good luck with
your trading good luck with your coding
speak to you soon have a great day
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you