97# SMA Crossover Trading System

Submit by Joy22 (Written By Luca De Wilde)

 

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

 

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