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Forex trading strategy #1 (Fast moving averages crossover)


Trading systems based on fast moving averages are quite easy to follow. Let's take a look at this simple system.
Currency pairs: ANY
Time frame chart: 1 hour or 15 minute chart.
Indicators: 10 EMA, 25 EMA, 50 EMA.

Entry rules: When 10 EMA goes through 25 EMA and continues through 50 EMA, BUY/SELL in the direction of 10 EMA once it clearly makes it through 50 EMA. (Just wait for the current price bar to close on the opposite site of 50 EMA. This waiting helps to avoid false signals).

Exit rules: option1: exit when 10 EMA crosses 25 EMA again.
option2: exit when 10 EMA returns and touches 50 EMA (again it is suggested to wait until the current price bar after so called “touch” has been closed on the opposite side of 50 EMA).

FOREX TRADING SYSTEM

Advantages: it is easy to use, and it gives very good results when the market is trending, during big price break-outs and big price moves.

Disadvantages: Fast moving average indicator is a follow-up indicator or it is also called a lagging indicator, which means it does not predict future market directions, but rather reflects current situation on the market. This characteristic makes it vulnerable: firstly, because it can change its signals any time, secondly – because need to watch it all the time; and finally, when market trades sideways (no trend) with very little fluctuation in price it can give many false signals, so it is not suggested to use it during such periods.


http://forex-strategies-revealed.com/


pls how to i make these averages continue on the chart or does it continue automatically...also what is the best ranges of days to used..5,10,20 or 10,25,50
how do i know a market is trading sideways

Forex Moving Averages don't extend in the future, they can only follow market price.
Regarding the best setups, there are as many of them as probably traders trading Forex. The best way to know which setup will work for you is to test it. Experimenting with indicators can be fun!

You can tell when the market starts moving sideways by looking at EMAs: as the inclination disappears, a flat almost horizontal EMA pattern starts to emerge.

While the market is trading sideways it does not make any new highs or new lows. You will be able to draw simple channel lines and watch the market trading inside that channel. A break out of the channel will re-establish a trending market mode.

Regards,
Edward.

hi,
Great website!!
Could you please let me know what does EMA stands for?
I know that MA is Moving average, but what does the E mean?

Another important unclear issue for this system : Where do I set the stop loss?

Hi,
EMA stands for Exponential Moving Average. It is a fast moving average, where more weight is given to the latest data.
Ideally, a stop loss should be placed above/below the previous swing high (downtrend) / low (uptrend). If it appears to be too far, then traders should use a fixed stop which would be individual for each case and will depend on a money management and trading approach chosen by a trader.

Regards,
Edward.

Hi, how do i get my money (profits) when i trade and get profits? what is the procedure/process? is it cumbersome.

You'll be able to withdraw your profits after you close your open trading positions.
To close a position, you can use Exit rules described above.
In addition, I would suggest drawing Pivot Points and add Fibonacci extension levels. Pivots and Fibonacci will help to mark potential profit targets. You may then either exit at those levels once you are in profit or tighten a stop loss and allow a trade to run further till EMAs cross back (as described in the exit rules above).

Regards,
Edward.

thanks a lot for your infos. Please can you tell how to make the second line appear in metatrader platform.

a second line.. hm.. could you please clarify what exactly would you like to do/achieve?
If it is about adding a second moving average, then simply add another indicator and change settings to whatever value your need.

Regards,
Edward.