The fundamental purpose of MAs are to define trend direction and strength along with providing support and resistance.
As MAs are mostly bounded to trends therefore MA bases strategy are recommended for Trending Markets only and may not be profitable in Range Markets.
The X-man MA Strategy is based on crossover of SMA (10) and SMA(20) to generate entry position. Stop loss and Take Profit is based on resistance and support of MAs.
X-man Strategy Setup
Timeframe 15 min above (H1 recommended)
Long Entry - Bullish Crossover
1 - Wait for SMA (10) to cross SMA (20) on upside
2 - Pay attention to slope of MA, if slope is not steep enough DO NOT Enter
3 - Enter long on next candle Open
4 - Stop Loss below SMA (10) or Low of previous candle
5 - Take Profit - when candle body closes below SMA (20)
Short Entry - Bearish Crossover
1 - Wait for SMA (20) to crossover SMA (10)
2 - Pay attention to slop of MA
3 - Enter Short on next candle open
4 - Stop loss above SMA (10) or high of previous Candle
5 - Take profit - when candle body closes above SMA (20)
Entry and exit can also be confirmed using different candle stick patterns such as exhaustion candle.
hi looks like a nice strategy..
what success rating would you give this if you have been using it
This strategy should give good results in trending market but no really good for range market.
I am testing it my self currently, so I will update you on it as soon as I have some decent number of trades. You are more then welcome to try it and let me know your experience. It is always recommended to try new strategy in Demo account.
Great Strategy, seems to have a good risk to reward potential.
Do you take your profits early or do you wait till price closes below the SMA (20) to exit the entire trade?
You can add to or take out from positions depending on the momentum of the trend, here momentum can be gauged by looking at slope of MA, if slope remains steep you can add and if it start to diminish you can start taking out profits.
In above snapshot one may have consider lightening up the position when SMA (10) start to loss some momentum as the price retrace to SMA(10) and could have added to position once it bounced off SMA (20) and crossed SMA (10).
Thanks for comments
I have two issues with MA cross over strategies.
1.By the time the crossover happens,price has moved quite a bit ( meaning chances of price reversal increases). To ignore small price retraces, maybe a filter is needed e.g. Using a higher time to confirm a trend.
2. How does one measure the angle/slope of the MA? It is quite subjective to me because some trade might see the slope as steep while the other as gentle.
I would like to hear how other traders trade with MA crosses,as for me, most good trades came from using MA as support and resistance ( bounces).
Abie, one can soley trade on one indicator be it stoch, MACD or MA, most of the the technical traders use some combination or price action with indicators so you can confirm trend and entries using other indicators as for issues listed
1 - you can chose Shorter (Faster) MAs like 10, 20 that and one can even chose EMA rather then SMA that will indicate trend quicker but issues with faster on is false signal. So one has to look for balance.
2 - measuring slope, yes this is subjective but as other things in trading it comes with practice so when you do practice a strategy you can start to have a good feel of slop, if you have to put a number you can say lets say 45 angel but again it comes with experience as everything else in trading