Tagged: MA

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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20 SMA Envelope and ATR

Suggested currency pair: GBP/USD
Timeframe: Daily, 1H
Indicators: 20 period SMA with 0.5% envelope applied, 14 period ATR

Rules:
Long at open of next bar when price close above the upper bound of the envelope. Initial stop loss is ATR of the signal bar.
Short at open of next bar when price close below the lower bound of the envelope. Initial stop loss is ATR of signal bar.
If trade is stopped out, we will wait until a new trading signal appears.
If the trade is going for us, we will keep our trade open until the opposite trade signal appears.

Trade 1:
Price close at 1.4696, which is above the upper bound of 1.4564. The ATR is 191 and will be our stop loss size.
Long at 1.4696 with initial stop loss placed at 1.4505.
Closed trade at 1.5575 when Short trade signal appeared for a profit of 879 pips on risk of 191 pips.
Trade 2:
Short signal appeared and we close out our previous long and reverse our position to turn short.
We shorted at 1.5575 with a stop loss at 1.5724, a 149 pips stop loss.
20SMAenvelope-final

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