The simple moving average crossover forex strategy is one of the most used trend following strategies among currency traders.
Forex Chart Setup
Preferred Time Frame's: 1 hour and above
Trading Indicators: 5 exponential moving average (EMA), 200 simple moving average (SMA)
Recommended Trading Sessions: Euro and Us
Currency Pairs: Any
How the strategy works
1) Buy when the EMA 5 crosses the SMA 200 from below.
2) Sell when the EMA 5 crosses the SMA 200 from above.
3) Place a stop loss below the most recent level of support for buys and above the most recent level of resistance for shorts.
Take Profit Ideas
1) Exit the trade when the two moving averages crosses in the opposite direction of the original buy or sell signal.
2) Go for X pips. (for example 100 pips)
3) Buy two lots and sell the first for risk-to-reward 1:1 and the second half for risk-to-reward 1:2.
4) Use a trailing stop loss.
How to increase your chances of success trading the forex moving average crossover?
Determine the overall trend on a higher timeframe and trade only in the direction of the overall trend. For example, is there a strong up trend on the daily chart? Take only long positions on the 1 hour chart. Avoid trading against the trend.
Euro/Dollar 1 Hour Chart Example
Forex Chart Setup
Preferred Time Frame's: 1 hour and above
Trading Indicators: 5 exponential moving average (EMA), 200 simple moving average (SMA)
Recommended Trading Sessions: Euro and Us
Currency Pairs: Any
How the strategy works
1) Buy when the EMA 5 crosses the SMA 200 from below.
2) Sell when the EMA 5 crosses the SMA 200 from above.
3) Place a stop loss below the most recent level of support for buys and above the most recent level of resistance for shorts.
Take Profit Ideas
1) Exit the trade when the two moving averages crosses in the opposite direction of the original buy or sell signal.
2) Go for X pips. (for example 100 pips)
3) Buy two lots and sell the first for risk-to-reward 1:1 and the second half for risk-to-reward 1:2.
4) Use a trailing stop loss.
How to increase your chances of success trading the forex moving average crossover?
Determine the overall trend on a higher timeframe and trade only in the direction of the overall trend. For example, is there a strong up trend on the daily chart? Take only long positions on the 1 hour chart. Avoid trading against the trend.
Euro/Dollar 1 Hour Chart Example
