BEST Moving Average Strategy 2021




the strategy is called the moving
average crossoverit is a very simple and famous strategie but most traders are actually trading it the wrong way the biggest mistake that everyone makes
when trading the strategy
is every time the moving average crosses
over
they immediately take a position
when the faster moving average crosses
above the slower moving average
they immediately take a buy position
and when the faster moving average

crosses below the slower moving average
they immediately take a sell position
this is actually the worst way of
trading the moving average crossover
because using the strategy this way only
works if the market is trending
if the market is on a range like this
you will receive
so many false signals and this will wipe
out your account
very quickly the next mistake that
people make when trading the moving
average crossover
is that they use too many moving
averages remember
the more moving averages that you use
the later your entry signals will be
for example let's say you're using two
moving averages
the 20 and the 50 period so
if the 20 period crosses above the 50
period
you take a buy position here but
if you added another moving average
let's say the 200 period
then you would instead enter here which
is a much later entry
compared to if you only used two moving
averages
so the lesser the better
another mistake that people make when
trading the crossover strategy
is that they're trading it on lower time
frames
lower time frames tend to have less
trend and more range markets
so that is why most traders lose money
when trading the crossover on lower time
frames
so instead this is how i would trade the
moving average crossover
i'm only going to be using two moving
averages the 20
and the 50 period the first step
is that i would choose a high time frame
i recommend using the daily time frame
for this strategy
but if you think that that's too high
then you can just use the one hour chart
instead
next i would pick a pair
then what i'm trying to look at is how
the market is reacting to the moving
average crossover
let me show you what i mean if you zoom
out and look closely at the 20 and 50
period
you can see that the price tend to not
react to the crossover
here we can see that the moving average
crosses over downwards
but instead of following the crossover
and also heading downwards
the price instead reverses and heads
back up
and now you can see it again here the
moving average crosses upwards
but the price instead went downwards so
clearly
this market has a history of not
reacting to the crossover
and so i will not use the crossover
strategy on this market
so let's look at another pair instead
here's the euro gbp if you zoom out
and look closely at the 20 and 50 period
we can actually see that the market
tends to react to the crossover
over here we can see that the moving
average crosses over upwards
and the price followed that signal and
made an uptrend
next you can see it happening again here
the moving average
crosses over downwards and the price
made a downtrend
this has actually happened multiple
times in this chart
every time the moving average crosses
over the market tends to follow that
same direction
and so now we know that this market has
a history of following the crossover
so i will confidently trade the
crossover strategy on this market
but remember just because a market
reacted to the crossover in the past
doesn't guarantee 100 that it's going to
do that again
in the future however it will still have
a much higher chance of doing so
compared to the market that never
reacted to the crossover in the first
place
so once you identified the right market
it's time to trade the crossover
for your entry signal if the ma crosses
above the 50 ma
you take a buy position and if the 20 ma
crosses below the 50 ma you take a cell
position
and for your exit signal you can use an
exit indicator
like the atr trailing stop loss to exit
your trades
this will give a much better exit
compared to if you waited for the moving
average to cross over again
for example let's say you took a buy
position here
if you waited for the lines to cross
over again
you would have exited your trade here
and wasted so many pips
but if you had used a better exit
indicator like the atr trailing stop

loss

you would instead exit here notice that
it gave a much better exit signal
and you would have kept more pips so
that's my approach when trading the
moving average crossover
another way of using the moving average
is by trading it like support and
resistance
and another indicator that is perfect
for the strategy
is the stochastics so here's an example
on how the strategy works
in this chart we can see that the price
went up to this level
it hit and reverses downwards this
happened multiple times which further
confirms that the moving average
is acting as a resistance next
we also noticed a pattern every time
prices went up to the resistance
while the stochastics is at overbought
the price tends to reverse downwards
and now as you can see in the current
price
we are back at the resistance level
while the stochastics
is at overbought so this is a good
opportunity to take a sell position
let's look at another example in this
chart
we can see that the moving average is
acting as a support
as prices went down to this level hit
and reverses upwards
multiple times and we also noticed that
the same pattern has formed
every time prices went down to the
moving average while the stochastics is
that oversold
the price tends to reverse back up
so now as we look at the current price
you can see that it is back at the
support line
while the stochastics is that oversold
so this is a good opportunity to take a
buy position
another moving average strategy that you
can use is by combining the 200
exponential moving average
with any indicator and automatically
increase its win rate
let me give you an example if you're
just trading only using the parabolic sr
it will give you a win rate of only 38
percent
but if you combine it with a 200 ema
it will increase the win rate to 46
it also works with other indicators as
well for example the super trend
if you're trading only using the super
trend indicator it will give a win rate
of only 39
but if you combine it with a 200 ema
it can boost that win rate to 48
so adding the 200 ema with any indicator
can automatically increase its win rate
and the way you combine the 200 ema with
other indicators
is very simple if the price is above the
200 ema
you only take buy positions and if the
price is below the 200 ema
you only take cell positions so let me
give an example
if an indicator in this case the super
trend gave
a buy signal while the price is above
the 200 ema
you take a buy position but
if the super trend gave a buy signal but
the price is below the 200 ema
then you ignore this buy signal this
also works for cell signals as well
if the super trend gave a sell signal
and the price is below the 200 ema
you take a sell position but
if the super trend gave a sell signal
but the price is above the 200 ma
then you ignore this cell signal so
that's how you combine
any indicator with the 200 ema
so i just gave you the best moving
average strategy that you can implement
in your trading system right now and all
i ask for in return
is for you to take two seconds of your
time into liking the post and subscribe
to the channel
it literally takes only 2 clicks but it
means so much to me
and you can also check out my other
post as well so thank you guys

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