Tagged: Day

Simple Moving Average Cross

It may come as a surprise to some but the moving average indicator can be a complete trading system on its own with clear objective entries and exits.

FX pair: Any
Timeframe: 1H or Daily chart
Indicators: 50 EMA

Rules:

Open EUR/USD chart and choose the 1 Hr time frame.
Place the 50 EMA indicator and wait for the candle to CLOSE on the other side of the EMA line.

Long/Buy when price bar cuts EMA from below and CLOSE above it.
Short/Sell when price bar cuts EMA from above and CLOSE below it.

This MA price cross strategy is an always-in trading strategy where you are always in the market and an exit would mean opening a new position in the opposite direction. For example, if you were originally short 1 lot, you will enter a 2 lot buy when a new BUY signal occurs. One lot will be used to close your short position and another lot to open a new long position.

Examples:

The first trade in this example is a SELL at 1.2589, which is closed out shortly at 1.2632, incurring a 43 pip loss.

The second trade is a BUY at 1.2632 which is profitable and is exited at 1.3078, netting a hefty 446 pips profit. This trade on the EUR/USD, 1H timeframe, happens to be held for almost 8 days, which would make it into a medium to long term position. If it makes money, who cares anyway.

eu-1h-1ma-1 eu-1h-1ma-2

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