Forex trading strategy #2 (Slow moving averages crossover)
Submitted by Edward Revy on February 28, 2007 - 13:08.
Current strategy applies the same principles as Strategy #1.
Use time frame and currency which respond the best (1 hour, 1 day… or any other).
Indicators: (multiple of 7) 7 SMA, 14 SMA, 21 SMA.
Entry rules: When 7 SMA goes through 14 and continues through 21, BUY/SELL in the direction of 7 SMA once price gets through 21 SMA.
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what happens to this system under a choppy market and what currency pairs are they best for???
wow this strategies really work for me thanks for sharing keep it up thanks a lot
Hi rg,
By "allow a trade to run freely" I meant that a trade is now going to cost nothing, except the spread (since stop is at break even); therefore it allows us to stop watching it and let it run till we decide to take profits out or get a signal to exit — when 7 SMA crosses 14 SMA.
Regards,
Edward
**Another option would be: after +20 pips you may try moving a stop loss to break even and allow a trade to run freely;**
above what you mean by allow trade to run freely ?
thanks
rg
My email is
Regards,
Edward
hello thanks for you free lesson i enjoy it and i will trial it in my live trade. please how can i contact u if i need to get more assistance from you. please you can send me links on how i can contact u for more assistance in my trade.This is my e-mail address dl_wilson2000[at]yahooo[dot]com
hi regwards u doing really well i promise u that if ur strategies really work than i will give u royalti
Hi Robert,
In general, the output seen on the charts after smoothing out the price with same period EMA and SMA is quite similar.
But I probably see your point. If to compare setups from simple system #1 and #2 (where both screen shots use the same data) we may see that they suggest different times for entries and exits.
Therefore, I support your idea about taking entries and exits with different smoothing factors: it sounds good and should be tested.
Regards,
Edward.
Is it Possible for example to use EMA as a way to enter into a position since it provides us with information on what is currently happening with the market and use SMA to predict future price trend..?
robert
my advice: use SMA/EMA crossovers to OPEN the position, then use MACD and Zero-Lag MACD to CLOSE the position. Relying on the SMA/EMA crossovers for CLOSEing will lose you a lot of money - they're just way too slow in reacting to the market so their signals are always generated way beyond the optimum exit point. MACD indicators for me have proven far more timely and reliable. To test this, just backtest this strategy on historical data and you'll see what I mean.
To confirm a signal try using, for example, Parabolic Sar indicator with settings (0.1, 0.01) or possibly (0.1, 0.005) depending on a currency pair you choose to trade with - just test which one performs better.
Your further comments are welcome!
Regards,
Edward.
Edward,
Is there any indicator we could use with this strategy to get another confirmation which could help us avoid fake signals.
You may exit using rules given in the strategy: when 7 SMA touches 21 SMA.
Or exit whenever you feel that profit is right to keep.
Another option would be: after +20 pips you may try moving a stop loss to break even and allow a trade to run freely; and once 7 SMA crosses 14(!) SMA exit a trade.
Regards,
Edward.
I tried this with MACD to double confirm... this morning I when 1-2 hour after tokyo market open i bought the AUD/USD after just 30 min it raise 20+ pips... But i dunno when to take profit...
From the graph i think SMA's take long to indicate imediate rise and fall of price and you are prone to losing small pips before the graph shows. In simple i don't think they.re fast
thanks
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